







































































































































































































































































































LABOR PROBLEMS 


BY 

FRANK TRACY CARLTON, Ph.D., LL.D. 

>1 1 

PROFESSOR OF ECONOMICS IN 
CASE SCHOOL OF APPLIED SCIENCE 



j 

> 



D. C. HEATH AND COMPANY 

BOSTON • NEW YORK • CHICAGO • ATLANTA 
DALLAS • SAN FRANCISCO • LONDON 




/ 

Copyright, 1933 
By FRANK T. CARLTON 


No part of the material covered by this copyright may be reproduced 
in any form without written permission of the publisher. 

3 A 3 


PRINTED IN THE UNITED STATES OF AMERICA 

F£8 'SI933 ^ 

©CH 60200 


PREFACE 


The relations between labor and capital, or between men and 
management, are changing in the United States with bewildering 
rapidity. As in the earlier volume entitled History and Problems 
of Organized Labor , it is the purpose of the writer to present to the 
student of industrial relations and to the general reader^a straight¬ 
forward study of the forces involved in what are commonly called 
labor problems.) The aim is not to justify or to condemn the prac¬ 
tices and ideals of organized labor, of shop committees, or of 
employers and employers’ associations; (it is to analyze the phe¬ 
nomena of which the practices and ideals are the visible mani¬ 
festations. J Labor organizations, employers’ associations, strikes, 
boycotts, the demand for the closed shop, restriction of output, 
and the ideals and point of view of organized labor or of organized 
capital are evolved through the play of social forces working 
within the economic field. The modern labor problem cannot be 
understood, and certainly cannot be solved, until the underlying 
causative forces, old and new, physical and social, are laid bare. 


Cleveland, Ohio 
September, 1932 


F. T. C. 



CHAPTER 


Preface . . 


CONTENTS 


PAGE 

iii 


I. The Scientific Method Applied to Industrial 

Relations. 3 

Social Mechanics. Industrial Complexity. The 
Era of Technology. Recent Progress. The Role of 
the Expert. 

II. Historical Background of the Labor Move¬ 
ment . 26 

The Struggle for Life. Institutions and Rights. 

The Industrial Life of the Ancient World. The 
Medieval Period. 

III. Early History of the American Labor Move¬ 
ment . 38 

The Workers of the Colonial and Revolutionary 
Periods. Development of the Factory System. 

Rise of Industrial Cities. Origin of Unionism. 
Labor Organizations. Labor and Humanitarian- 
ism. The Free School System and the Wage Earners. 

Land Reform and the Wage Earners. 

IV. The Civil War Period and After . 64 

Industrial Progress during the War. Labor dur¬ 
ing the Civil War Period. The Knights of St. Cris¬ 
pin. The Knights of Labor. 

V. The Labor Organization. 79 

What is a Labor Organization? The Purpose of 
Labor Organizations. Government and Structure. 

The Classification of Labor Organizations. What 
Characteristics Indicate Strength in Unions? What 
are the Characteristics of a Good Union? Leaders 
in Labor Organizations. American Labor in Politics. 

VI. The American Federation of Labor.102 

History. Structure. Antagonism between the 
Knights of Labor and the American Federation of 
v 









VI 


CONTENTS 


CHAPTER PAGE 

Labor. The Extent of Unionism in the United 
States. Whither American Unionism? Trade versus 
Industrial Unionism. 

VII. Migratory Labor and Radical Groups ... 119 

The Migratory Worker. The Industrial Workers 
of the World. The Communist. The Socialist 
Party. 


VIII. Employers’ Associations.129 

What are Employers’ Associations? Types of 
Employers’ Associations. The Labor Spy. 

IX. Policies oe Labor Organizations .135 


Admission to Membership. Jurisdictional Dis¬ 
putes. The Introduction of Machinery. Collective 
Bargaining. The Closed Shop. Restriction of Out¬ 
put. Hours of Labor. Limitation of Apprentices. 
Benefit Features. 

X. Coercive Methods.162 

Strikes and Lockouts. Causes of Strikes. Violence 
Connected with Strikes and Lockouts. Losses Due 
to Strikes and Lockouts. New Aspects of Strikes. 

The General Strike. The Boycott. The Attitude 
of the Courts toward Strikes and Boycotts. The 
Blacklist. The Union Label. 

XI. Scientific Mangement.189 

What is Scientific Management? The Origin of 
Scientific Management. The Opposition of Organ¬ 
ized Labor. Rationalization. 

XII. Industrial Peace.205 

Divergent Points of View. Common Interests. 

A New Point of View. Definitions. Mediation and 
Arbitration in the United States. Advantages and 
Defects of Arbitration. A Formula for Industrial 
Peace. Can the Strike be Eliminated in Industries 
Affected with Public Interest? 

XIII. Cooperation between Management and Men 232 

Control in Industry. Trade Agreements. Ex¬ 
amples of Trade Agreements. The Significance of 
Trade Agreements. 







CONTENTS 


Vll 


CHAPTER PAGE 

XIV. Employee Representation .244 


What is Employee Representation? History and 
Growth of the Shop Committee. Classification. 
Future Possibilities. Installing Employee Represen¬ 
tation. Examples of Employee Representation. 
Employee Interviewing. 

XV. Methods of Compensation .257 

What is a Fair Wage? Methods of Wage Pay¬ 
ment. Essentials of a Wage-Payment Plan. The 
Determination of Basic and of Relative Wage 
Rates. Profit Sharing. Product Sharing. Ad¬ 
vantages of Profit Sharing. Objections to Profit 
Sharing. Welfare Work. 

XVI. Human Engineering .277 

The Human Equation. The Work of the Per¬ 
sonnel Department. Methods of Hiring. After the 


Applicant is Hired. Promotion. Labor Turnover. 
Leadership in Industry. 

XVII. Making Work Interesting.290 

Can Work be Made Interesting? Instincts. Fac¬ 
tors in Developing Interest in Work. 

XVIII. Purpose in Industry .306 

The Future of Human Engineering. What is the 
“Business” of Business? What are the Different 


Groups in Industry? Can the Purposes of Different 
Groups be Harmonized? 

XIX. Stabilization of Employment .312 

What is Unemployment? Statistics of Unemploy¬ 
ment and of Irregularity of Employment. The 
Right to a Job. Causes of Unemployment. How 
May Unemployment be Reduced? 

XX. Women and Children in Industry .335 

The Child Labor Problem. Child Labor before 
the Civil War. The Extent of Child Labor in Re¬ 
cent Decades. Early Legislation in England. Leg¬ 
islation in the United States. Opposition to the 
Prohibition of Child Labor. Woman Labor before 
the Civil War. Work and Wages of Women. Rea- 









viii CONTENTS 

CHAPTER PAGE 

sons for the Low Wages of Women. Industrial Home 
Work. Children in the Machine Age. 

XXI. Labor Legislation.353 


Legislative and Constitutional Difficulties in the 
United States. What is Liberty? Trend of Court 
Decisions. History of Labor Legislation. The 
Chief Forms of Labor Legislation. Present Status 
of Labor Legislation. The Minimum Wage. 

XXII. Social Insurance.384 

The American Point of View. Employers’ Lia¬ 
bility for Industrial Accidents. Workingmen’s Com¬ 
pensation Acts. Health Insurance. Old Age 
Pensions. Unemployment Insurance. 

XXIII. Cooperation .407 

Types of Cooperative Enterprises. The Coopera¬ 
tive Store. Consumers’ Cooperation in Great Britain. 
Consumers’ Cooperation in the United States. Pro¬ 
ducers’ Cooperation. Distributors’ Cooperation. 
Credit Cooperation. The Building and Loan Asso¬ 
ciation. Conclusion. 

XXIV. Immigration and Population Problems .... 418 

What is Immigration? History of Immigration in 
the United States. Causes. Changes in the Nation¬ 
ality of Immigrants. Early Opposition to Immigra¬ 
tion. Immigration Problems. Legislation. Why 
were Restrictive Laws Passed? What were the Con¬ 
sequences of a Policy of Restriction? Restriction 
of Immigration and International Problems. Popu¬ 


lation Trends. 

XXV. New Aspects op Education .437 

Education and Industrial Evolution. Educational 
Ideals. The Training of Apprentices. 

XXVI. Today and Tomorrow .444 

The Aftermath of the “New Era.” The Tradi¬ 
tional and the Actual. After the Depression. 

Index.453 








LABOR PROBLEMS 

































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CHAPTER I 


THE SCIENTIFIC METHOD APPLIED TO 
INDUSTRIAL RELATIONS 

SOCIAL MECHANICS 

For indefinite centuries men have been seeking for the solution 
of various problems relating to the toilers, or, in present-day 
terminology, relating to industrial relations. Students of ancient 
history have disclosed the struggles of the plebeian or slave class 
against the patrician or ruling class, centuries before the Christian 
era. The labor problem is a problem of all nations, all peoples, 
and all centuries. The factors in the equation change but the 
problem remains. History is in reality a story of the struggle of 
the masses upward; worthwhile history is a chronicle of the rela¬ 
tions of man to man in the fierce struggle for existence and for 
dominance over natural forces. Migrations, wars, changes of 
dynasties, new social and political alignments are but the outward 
and visible signs of adjustments of man to his physical and social 
environment. Our labor problems, past and present, are the 
growing pains of human society. Social adaptation does not move 
smoothly in well lubricated grooves. Friction is very apparent 
in the form of social inertia, custom, laws, and class interests. 
Slavery and serfdom have disappeared; but traces of these older 
forms may readily be discovered. The arrogance of employers 
and of the wealthy and powerful is a survival of what was a much- 
lauded virtue in the feudal and military age. The docility and 
unquestioning obedience so frequently expected of workers are 
the ancient virtues of the slave and serf clothed in the costume 
of a nominally free wage worker. 

Social and political changes are intimately connected with modi¬ 
fications in the methods of doing the world’s work. In the last 
century and a fraction numerous industrial changes have taken 
place. As a direct consequence problems have arisen which were 
unknown and unimagined a few generations ago. The problems 

3 


4 


LABOR PROBLEMS 


which we are to study have developed out of the changes which 
have followed what is commonly called the Industrial Revolution. 
This industrial revolution is not the only one in the world’s history. 
The use of bronze or iron tools, for example, precipitated an indus¬ 
trial revolution. The development of agriculture constituted an¬ 
other such revolution. In the eighteenth century the invention 
of the steam engine marked the opening of a rapid and important 
transformation in social, political, and industrial affairs. Through¬ 
out the history of mankind discoveries, inventions in the ways 
of getting a living, and new modes of traveling and communi¬ 
cating have ever caused cataclysmic changes in human society. 
The discovery of the use of fire and of the smelting of metals, 
the invention of gunpowder, of the mariner’s compass, and of the 
steam engine, each preceded and caused sweeping social and 
political changes. More recently the steel rail, the copper wire, the 
electric dynamo, the daily paper, the automobile, the radio, and 
aircraft have aided in ushering in a new social and industrial era. 
In order to settle the disturbed human cauldron a new alignment 
of individuals and of associations of individuals is necessary. Not 
one of the great reform or progressive movements of history can 
be adequately explained or clearly understood without turning 
the attention to the industrial evolution or revolution which pre¬ 
ceded it and ushered it upon the spectacular stage of political 
history. 

Human society in recent decades has presented to the student 
of sociology and of history a bewildering moving picture. It has 
seemed that nothing is stable or sacred, that everything is under¬ 
going modification, upheaval, or rejection. The typical man or 
woman is often tempted to cry out passionately against the new 
and to cling tightly to the old because it is old and familiar. Meth¬ 
ods of doing the world’s work and of controlling the world’s wealth 
have been changing since the turn of the century with unprece¬ 
dented rapidity, and, consequently, social, political, legal, and 
religious readjustments are imperative but also are unfortunately 
difficult of orderly attainment. A fragile article, subjected to 
sudden and unusual stresses and strains, is likely to crack; human 
society subjected to rapid industrial modifications is in imminent 
danger of an upheaval unless wise and progressive leadership eases 
the strain by adapting the political, social, educational, and re- 


THE SCIENTIFIC METHOD 


5 


ligious institutions to the new situation. To preserve the status 
quo is impossible; the alternatives are chaos or progress along 
many lines. 

Organizations of wage workers and associations of employers are 
among the instrumentalities which have arisen out of the com¬ 
plexity and confusion incidental to the industrial changes of the 
last century. The study of the problems relating to labor organiza¬ 
tions and industrial relations should be primarily concerned with 
causes; it may logically be called a branch of social physics or 
social mechanics. Thoughtful men and women are beginning to 
see that the complex of problems which is called “labor problems” 
or “the labor problem” is something to be carefully re-studied. 
It is an engineering problem, a problem in human engineering. 
Perhaps, in due time, a Bureau of Human Standards may be 
established. The labor problem should not be considered as a 
matter chiefly for the emotions. A labor problem should be 
analyzed as one would analyze a problem in mechanics. The 
human engineer should know how “to organize human labor 
systematically.” 

Forces as positive and potent as those disclosed in the mechanical 
world are acting and reacting in the industrial relations between 
men and management. These forces are many and varied; they 
are elusive. Less is known about them than is known about 
physical forces; but there is gradually emerging a scientific study 
of human behavior, a study of the ways of man. The road to 
industrial peace and goodwill, the road to efficiency in industry, 
must first be paved with the bricks of sympathetic understanding 
of the desires and longings of men, and of their interests. Unions, 
shop committees, employers’ associations, strikes, boycotts, arbitra¬ 
tion hearings, restriction of output, the ideals and points of view of 
workers and of management, are evolved by the play of forces 
working within the economic field. Industrial relations today 
and tomorrow cannot be intelligently studied and directed until 
the underlying causative forces, old and new, physical, social, and 
psychological, are laid bare. 

INDUSTRIAL COMPLEXITY 

The present age is distinctly one of technology. It is an era of 
industry and social complexity. Feudalism and pioneer society 


6 


LABOR PROBLEMS 


were comparatively simple. Since the Industrial Revolution, and 
especially since the turn of the century, economic and business 
relationships are characterized by interdependence; the pioneer 
period was one of independence. In pioneer America and in feudal 
Europe the practical problem of getting an adequate supply of 
food and fuel was in the main one for the family to solve. Today, 
in crowded cities and in typical specialized activities, the mass 
of mankind has been divorced from the direct production of the 
commodities they consume. Each worker literally produces for 
the multitude, and each worker, idler, or youth in preparation for 
future activities, utilizes the joint product of many cooperating 
individuals widely scattered in time or place. 

Modern specialized and interdependent industrial society can 
only be kept going smoothly while all types of worker — farmer, 
miner, railway-man, truck-driver, clerk, manager, technical expert, 
and others — do their parts in an efficient manner and on time. 
The industry affected with public interest is a product of recent 
decades. Man in an industrial society is no longer an independent 
economic unit. The transformation of pioneer society into an 
industrial and exchange economy spells not only startling changes 
in methods of getting a living but also in social relationships and 
the concepts of individual rights and attitudes toward fellowmen. 
Today’s demand is indeed for technical competence; but there are 
important social and political heritages from the past, hangovers 
from a simple, rural, and agricultural civilization, that cannot be 
neglected. 

Thanks to science and power, the world has been growing smaller 
relatively. Persons and goods are transported regularly to and 
from distant parts of the globe. The telegraph, the cable, the 
telephone, and radio transmit news around the world almost 
instantaneously. International trade and world markets are fa¬ 
miliar to vast multitudes of people. Local markets, local govern¬ 
ments, and local fashions are affected by distant producers and 
distant purchasers. No dark, unknown continents remain on 
the business map of today; the world is becoming one vast neigh¬ 
borhood. Nevertheless, business and financial methods have as 
yet been unable to divest themselves of local and pioneering habits. 
Business ideas, slogans, and methods, like governmental units, 
come down to us from the wagon-road era, from the period of 


THE SCIENTIFIC METHOD 


7 


localism in markets and communications. Habit, social inertia, 
the folkways of our fathers, are difficult to change. The student of 
economics who points out that a new industrial and scientific 
world demands new political, social, and economic programs and 
formulas is called a dreamer or he is labeled as a dangerous and 
radical innovator. Few, if any, private industries in actual practice 
have attained the social or community point of view. Indeed, 
our economic system is based on “principles that emphasize indi¬ 
vidual ownership and aggrandizement and that seldom correlate 
with national and international aims.” The planlessness and the 
serious maladjustments in complex industry are not due to a lack 
of ability to develop a reasonably-well coordinated industrial 
mechanism, but to the lack of any potent motive to do so and to 
social inertia. 

The American nation with approximately 125,000,000 men, 
women, and children equipped with needs and desires for neces¬ 
sities, comforts, and luxuries of a bewildering variety, may well 
be considered to constitute a great market. The forty million plus 
gainfully employed, together with the housewives of the nation, 
are the working force for this vast array of consuming human 
beings. The American business world with its machinery and 
equipment may be considered as the productive plant for the 
people of the United States. It is a gigantic plant with a raw 
materials, a manufacturing, a transportation, and a sales depart¬ 
ment. It is augumented by a large number of professional workers, 
personal servants, and governmental employees. The income of 
the nation is the product of the combined efforts of the gainfully 
employed. 1 

Critics have asserted that Americans only become alert and wide¬ 
awake in an emergency — a war, a catastrophe, or a depression. 
This country was settled, our cities built, and our industries de¬ 
veloped without a definite plan or program. Americans have been 
opportunists. The departments of this giant plant, the United 
States, incorporated, have been allowed to evolve in a haphazard, 
or unplanned, way. Individual interest in profits was supposed 
to bring about harmony and balance between and within depart¬ 
ments. As industry has passed out of the pioneer stage, as ma¬ 
turity has come, serious wastes and maladjustments are becoming 
1 Carlton, F. T., Economics, p. 67. 


8 


LABOR PROBLEMS 


so evident that even the ultra-optimists and the super-individualists 
are occasionally suffering misgivings. Industry after industry — 
soft coal, farming, automobile, shoe, sugar, rubber — has been 
over-expanded and suffers from the disease of “excess plant capac¬ 
ity” as the result of optimism born of lack of knowledge and 
absence of social vision. Anarchy in modern business is becoming 
as dangerous as it would be in the government of a highly devel¬ 
oped industrial nation. Every well-managed plant carefully coor¬ 
dinates the work and the output of the several departments within 
the organization. Not so to date in industry. We have, however, 
done something along this line in the case of railways. For ex¬ 
ample, a new road may not be built without the consent of the 
Interstate Commerce Commission — a sort of railway planning 
and coordinating commission. Coordination, rather than ruthless 
competition and unplanned expansion, is the watchword in the 
railway world. But as yet no general plan for coordinating railway 
transportation with water, truck, pipe line, or other means of trans¬ 
portation, has been developed. Industry as it becomes mature, 
interdependent, and far-flung, needs the same economic states¬ 
manship which has been applied in the mechanical field. And, 
unless this need is supplied, more and more serious maladjustments 
and depressions may safely be forecast by unemotional students 
of economics. Unless industry is looked at from the community 
point of view — national or even world point of view — coordina¬ 
tion seems impracticable. 

In the words of Glenn Frank, “the modern business man is a 
pioneer.” He is too often dominated by the ruthlessness, the 
individualism, and the wastefulness of the pioneer. As the frontier 
passed into history, the call for the pathfinder, the scout, and the 
man with the hoe became weaker and weaker. The agricultural 
expert, the scientist, and the engineer are needed. Likewise, in 
business, the coordinators, the men who can get along with others, 
the industrial statesmen, are today the men who should be placed 
in control — if we would avoid waste, industrial strife, and political 
cataclysms. One observer has remarked that “earlier civilizations 
did not survive their coming-of-age.” 1 

The American nation developed out of “a loose collection of 
isolated provincial communities.” Our business traditions and 
1 Flanders, R. E., in Beard, C. A., Toward Civilization, p. 33. 


THE SCIENTIFIC METHOD 


9 


practices, our conceptions of individual and social “rights” have 
been stamped with the crude coloring of the isolated frontier com¬ 
munity familiar only with small-scale business. We are so steeped 
in the ethics of little industry that great groups of the American 
people look upon the “right” to strike, to discharge employees 
arbitrarily, to close down a business in order to bring employees to 
terms, or to practice sabotage as “fundamental and inalienable.” 
But in these days of big business, wide markets, unions, and em¬ 
ployers’ associations, is not the right to demand that business 
function uninterruptedly and efficiently as fundamental as any of 
the time-honored rights? Let us recall, moreover, that the “funda¬ 
mental right” to avenge fancied or real insults by means of the 
feud and the duel has been definitely discarded; and now the 
fundamental rights of small-scale business are being repeatedly 
questioned. It seems probable that these are actually in the diffi¬ 
cult process of being discarded. The new “right” of consumers 
to demand uninterrupted and efficient functioning of key or socially 
important industries is appearing above the ethical and legal 
horizon. Its appearance tends to dim the glory of the “right” 
of the individual, employer or employee, to throw a monkey-wrench 
into the industrial machine every time he becomes disgruntled or 
wishes to gain concessions. 

Business is rapidly becoming a public function; it is no longer to 
be considered solely a private matter. Americans, and Europeans 
in a larger degree, are accepting the idea that the owner of a business 
can no longer operate it exactly as he pleases. Private property 
rights are being narrowed in several directions. The right of the 
investor to act as the sole director of industry is being questioned. 
The workers, technical, skilled, and unskilled, are demanding with 
increasing vigor a voice in industrial management. The age of 
isolation, localism, and group independence is now a matter of 
history in a great industrial country such as the United States. 
Centuries ago, the feud and the duel began seriously to interfere 
with the welfare and business affairs of persons and groups not 
concerned in those quarrels. Presently, public opinion began to 
deprecate the resort to such crude and violent methods of settling 
disputes. As a last resort for those who were unable or unwilling 
amicably to settle their own disputes, the law courts were invented 
and disputants were forced under coercion to have their quarrels 


IO 


LABOR PROBLEMS 


adjudicated by the court instead of resorting to the ancient practice 
of private warfare. Likewise, may we hope, industrial warfare is 
now on the threshold of a new epoch in human history; it may be 
passing off the stage. 1 

Modern complex industrial society may logically be compared 
to a delicate and intricate animal organism. To stop the function¬ 
ing of a key industry may entail disastrous results similar to those 
of cutting an artery in a human body. Wars, international or 
industrial, may easily ruin modern industrial civilization and usher 
in a new dark age. Civilization is a guarded area of relative peace 
in which teamwork is essential. If industrial friction, sabotage, 
mutual suspicion in industry, autocratic and arbitrary methods 
on the part of employers, and increasing emphasis upon class con¬ 
sciousness, continue and develop in intensity and scope, a social 
and industrial breakdown is ahead. If the United States is to 
avoid a catastrophe in the not distant future, steps must be taken 
to reduce industrial friction and to enlarge the field of common 
interests in industry. Men must learn to live and work together 
peacefully or civilization will inevitably revert to savagery. In a 
highly developed industrial nation such as the United States or 
Great Britain, utilizing technology and science, revolutionary pro¬ 
cedure, either in the political or the industrial field, with the in¬ 
evitable sequence of stopping the wheels of industry and clogging 
the flow of necessary commodities to the great centers of popula¬ 
tion, would lead to incalculable suffering, sickness, poverty, death, 
and degeneracy. The disaster would fall upon all alike — rich 
and poor, privileged and unblessed. A society dependent upon 
technology can be easily disrupted by war and by internal friction. 

Unfortunately, the lot of the average worker, even in this 
country, is not particularly enjoyable. He has a routine job with 
little chance for advancement; his wages are barely sufficient to 
afford a comfortable standard of living for his family. In too 
many instances, he is not well fitted to his job; his working con¬ 
ditions are not comfortable; his job is insecure; his home environ¬ 
ment is not attractive; he is often reprimanded and made to feel 
by his foreman and others that he is of little account; and his 
working and leisure life is dull. It is in such an unattractive or 
forbidding atmosphere that unrest, radical propaganda, anti-social 
1 See Carlton, F. T., Economics, pp. 12 ff. 


THE SCIENTIFIC METHOD 


ii 


conduct, and antagonism are bred. Industrial inefficiency and 
nagging foremen contribute largely to emotional strains and stresses 
which make for bad industrial relations. Put a man in the right 
job, enable him to do it fairly effectively, give him credit for what 
he accomplishes, give him a sense of job security ■— and a peaceful 
industrial world may be reached in the near future. 


THE ERA OF TECHNOLOGY 

It has been suggested that instead of dividing the history of 
mankind into such artificial epochs as primitive, ancient, medieval, 
and modern, only two epochs should be noted — before the ma¬ 
chine, and after the invention of power-driven machinery. The 
machine age should, however, be subdivided into two periods *— 
infancy, extending in this country and in a few other industrially 
advanced nations to about 1914, and maturity. The character¬ 
istics and problems of the maturity of the machine age, or of the 
new age of technology and automatic machinery, form the subject 
matter of the remainder of this chapter. 

Among the most noteworthy of the characteristics of the present 
age of technology or of the maturity of the machine, the following 
may be listed: — 

Great and increasing per capita productivity 
Interdependence of individuals and groups 
Specialization of occupations 
Multiplication of wants 
Large-scale business units 

Improvement in the ease and rapidity of transportation and com¬ 
munication 

Growing importance of cities 

Slowing-up of the rate of increase in population 

Falling birth-rate 

Lengthening of the average span of human life 
Increase of leisure for all 
Emphasis upon research 

United States no longer a land of opportunity for the immigrant 
Use of propaganda 

The ages-old quest for food took on new aspects after the Indus¬ 
trial Revolution. The heavenly dream of a sufficiency of food 


12 


LABOR PROBLEMS 


for mankind gave promise of fulfillment. The potential pro¬ 
ductivity of the American nation has increased to such an extent 
that it seems possible to banish poverty from the land. Today, 
we can produce enough — an abundance — of food; the difficulty 
confronting the nation is that connected with getting purchasing 
power into the hands of those who need what is produced. We 
watch the over-development of certain industries under the 
control of optimistic competing managements, and we talk about 
the “menace of plenty.” Our primitive and pioneer ancestors 
never dreamed of a danger from over-production. Primitive, 
ancient, and pioneer peoples feared a shortage of food. In the 
maturity of the power-driven machine age, Americans fear a 
shortage of jobs and of the counters with which purchases are 
made. Curiously enough, the primitive man would think, we fear 
want in the presence of plenty. The age of technology and of 
automatic machinery has pushed aside the direct quest for bread 
and butter. It is now a job which gives access to bread and to 
jam on the bread. The quest for food has become an indirect and 
round-about process. 

While engineering, invention, science, scientific management, 
natural resources, the use of power, and the like have made possible 
great per capita productivity in the United States, one should 
not be unmindful of the role played by a stable government which 
protects property rights and forces the fulfillment of contracts, 
and by a credit and banking system. Well-organized financial 
institutions and stable governments are as essential to productive 
efficiency as science and engineering. The United States is also a 
nation peopled by a relatively scanty population. The density 
of population is much less than that of many other nations. A 
large influx of immigrants or a high birth-rate, or both, would sooner 
or later lead to reduced per capita production. In a race between 
science and technology, and increasing population, the latter will 
finally win. 

Historically and geologically speaking, an old age is ever coming 
to an end and a new epoch is always in the making; but the un¬ 
usual elements in today’s shifting scene are the extraordinary 
rapidity of the change, and the fundamental nature of certain 
changes which science and the machine have wrought in the 
working and living conditions of mankind. Science and engineer- 


THE SCIENTIFIC METHOD 


13 


ing have been so successful in recent years that our main problems 
are no longer in the field of productive activity. The baffling 
questions are now in the realm of distribution, in the field of the 
social sciences, in applied economics. America is out of the 
scarcity period; but maladjustments are transforming Professor 
Patten’s “pleasure economy” into a new and unexpected form of 
“pain economy,” with poverty, unemployment, insecurity, and 
suffering walking beside science, power, and great productive ca¬ 
pacity. Evidently, the power-driven machine, like politics, “makes 
strange bed-fellows.” Einstein, when in California, is reported to 
have asked: “Why does this magnificent applied science which 
saves work and makes life easier, bring us so little happiness? 
In war it serves that we may poison and mutilate each other. In 
peace it has made our lives hurried and uncertain.” This, indeed, 
is a fascinating problem for a school of applied science. How 
may the forces set in motion by science and technology be so 
directed as to make for a reduction of poverty and of unemploy¬ 
ment, and for the advancement of culture and of the appreciation 
of art and literature? 

In a depression, the great productive capacity of the nation is 
held in check, men and machines are idle while men, women, and 
children are cold, poorly fed, and inadequately clothed and housed. 
The disease of the machine age, called the business cycle in its 
periods of chill, paralyzes industry. To cure this disastrous illness 
of the industrial order, we do not so much need more of machinery 
or of physical science as we need brain power applied to the 
economic and business problem of keeping the productive ma¬ 
chinery of the United States operating, and the flood of goods 
flowing to the families of all who are able and willing to work. 
The problem is to balance specialization with coordination, and to 
temper interdependence with cooperation and long-time national 
and international planning. A popular writer paints the picture 
in this vivid fashion: “Actually we need less industrial and 
farm labor, and it’s up to us to figure out some ingenious and 
moral way of letting a few farmers feed us and a few mechanicians 
push buttons and pull levers for us, while we make the country 
over into a place fit for human beings to live, love, drink, and 
die in.” 1 

1 Franklin, J., The Forum, Aug., 1931, p. 69. 


14 


LABOR PROBLEMS 


Critics of the machine age have pointed to the decline in crafts¬ 
manship and to an increase in routine and monotonous work. In 
industries in which machinery is generally used, the great majority 
of workers are machine tenders and feeders. The worker, it is 
asserted, has become an auxiliary to the machine. The machine 
is becoming “paramount; the worker incidental.” As industry 
approaches the maturity of the machine age, the pessimistic view 
in regard to the direct effect upon the workers requires certain 
qualifying statements. 

Men and women are inclined when looking back upon past epochs 
to focus the attention upon the good traits and neglect to dwell 
upon less desirable relationships. The craftsman of the ancient 
and medieval periods was not the typical worker of those eras. 
Too frequently, the slave, the serf, the peasant, and the unskilled 
worker are overlooked. Were the working and living conditions 
which the workers of the distant past experienced attractive? 
Long hours, low pay, low standards of living, insanitary surround¬ 
ings, hard and monotonous work were unattractive features of the 
life of the typical worker of the pre-industrial Revolution epochs. 
The major part of the history of labor is a story of distasteful 
jobs reluctantly performed. Manual workers have ever disliked 
their jobs. Indeed, the glorification of work is practically a new 
phenomenon. The dislike of work and loafing on the job are not 
new industrial problems. They are as old as regular industry. 
The form of routine and monotonous work is different in today’s 
mass-production workshop from what it was when the pyramids 
were erected, but it is not something new under the light of the 
sun. Furthermore, the rank and file of workers of earlier days did 
not have opportunity to develop initiative. The overseer in the 
gang system was the unscientific forerunner of the planning room. 
The serf was caught in a stereotyped program which forced the 
individual worker into the customary groove. The student of 
today should compare the unskilled worker, the serf, and the slave 
of the past with the routine worker of the present; he should not 
compare today’s common laborer with the medieval craftsman. 
And when unskilled are contrasted with unskilled, those who are 
not dazzled by the fictitious glamour of a “golden past” will find 
that modern workers are not worse off than those of preceding 
epochs. 


THE SCIENTIFIC METHOD 


15 


As the machine age approaches maturity, heavy manual labor 
and purely routine work are being taken off the shoulders of the 
worker. Mechanical handling, conveyor systems, automatic ma¬ 
chinery, “electric eyes,” adding machines, push-buttons, and a 
multitude of ingenious contrivances are taking away from men 
and women much of the back-breaking and monotonous drudgery 
of the earlier years of the machine age and of preceding genera¬ 
tions. In many an industrial plant the machine has displaced 
handwork, the worker is now a repairman or a supervisor. The 
intricate machines, moreover, require much skilled work to pro¬ 
duce; and the repair, oiling, and care in case of breakdown will 
require the services of many workers. Many forms of creative and 
skilled work are outside, and bid fair to remain outside, the “Em¬ 
pire of the Machine.” The worker in the age of automatic ma¬ 
chinery, or in the period of maturity, no longer performs the 
routine work of being the personal servant of the machine. He is 
being freed for less machine-like work and for greater leisure. 
Management is beginning to think of the worker in mass pro¬ 
duction as a “measure of defect in the complete automaticity of 
machines.” 1 

The machine has been and is a competitor of man. It has dis¬ 
placed men and it continues to do so. The machine “ saves labor ”; 
but it shoulders the worker temporarily or permanently out of 
industry. It is causing technological unemployment — a new 
name for an older process. In the last two decades, the exceedingly 
rapid displacement of men and women by power-driven machinery 
has produced a fairly continuous grist of displaced and unadjusted 
workers. The machine is increasing productivity; but it demands 
consumers (purchasers) of its output. On the contrary, technologi¬ 
cal unemployment means reduced consumption. Here is the great 
paradox of modern industry. In mass production the machine 
has become the central figure; but, for successful operation, mass 
production must be balanced by consumption by the masses. 
Will the machine relieve man “of drudgery and abasement, or 
will it plunge him into futility and extermination” ? 2 The problem 
is that of making power-driven machinery the tool of men, giving 
increased productivity and leisure without the pitiful process of 

1 Wissler, W., Business Administration , p. 400. 

2 Ibid., p. 402. 


i6 


LABOR PROBLEMS 


the displacement of individual workers who are left without ade¬ 
quate income and without opportunity to gain an appropriate 
share of the fruits of the machine age. The machine is a means to 
an end — increase in productivity, and the reduction of disagree¬ 
able, boring, and degrading efforts in getting a living. Skillfully 
organized, the maturity of the machine age will bring increased 
comfort and leisure to the mass of humanity. 

A new appraisal of conduct in the light of a new day in industry 
is demanded. Practices which are highly commendable in one 
epoch of the world’s history are often of questionable desirability 
in another. Frugality and individual savings were prime virtues 
in a pioneer society of low per capita productivity; the desirability 
of thrift was a well-established American — Puritanical — doctrine. 
Today, in an age of machinery and of mass production, it is being 
proclaimed that too great emphasis upon the virtues of saving 
may actually menace the regularity of the industrial process. As 
capital accumulates and is used productively, it becomes less and 
less difficult to save or to accumulate more capital. The momen¬ 
tum of capital accumulation easily carries saving to higher and 
higher levels. The supply of capital increases cumulatively, and 
the sacrifice involved in saving tends downward. Granting that 
saving was very desirable in the pioneer period of our history and 
in a time of war, may it not be possible, or probable, that con¬ 
siderable saving in a machine and power age may have, to put the 
case conservatively, a less desirable effect? What, for example, 
is the effect of large savings upon the market for the output of 
mass-production establishments? 

Saving results in capital goods; and capital goods aid in pro¬ 
ducing more goods — consumption and capital. But saving cuts 
down the direct or immediate demand for consumable goods at 
the same time that it leads to the increased production of such 
goods; and, presently, the familiar complaints are heard of over¬ 
production, of warehouses full, of machines and workers in idleness. 
Too many American industries are in need of customers rather 
than investors, are in need of demand for their output instead of 
savings which make possible the production of more capital goods. 
Too much saving spells over-expansion of industry with a reduction 
in the demand for the output of industrial establishments and the 
recurrence of crises which have come with the advent of our modern 


THE SCIENTIFIC METHOD 


17 


industrial regime. If the industrial world saves much and pays 
low wages, it soon possesses the capacity for mass production 
without a market for its output. The situation is like that of a 
railway built into the wilderness ahead of industrial and agricul¬ 
tural development. It is ready to serve but has few to serve. 
Excessive economy will bring industry to a standstill. It seems 
reasonable to suggest that the exponents of mass production will 
in the future place less and less emphasis upon the desirability of 
large savings on the part of individuals, and that a policy of 
increasing the size of establishments only as markets widen will 
be advocated. 

In the maturity of the machine age, a short working day or week 
becomes practicable. Under normal conditions, with maladjust¬ 
ments and irregularities reasonably well ironed out, the potential 
productivity of the machine and power age makes a considerable 
measure of leisure attainable for all. Under the pathological con¬ 
ditions of a depression or in the case of a large number of men dis¬ 
placed by the rapid introduction of the machine, leisure for many 
is of the enforced and repulsive variety — unemployment. But 
the leisure which the machine makes possible in an economy which 
is not chaotic is leisure with a job; it is leisure growing out of a 
short working day or week. The power-driven machine and science 
tend to reduce the emphasis which our pioneers placed upon work 
and increased productivity, and to increase the insistence upon a 
shorter work-period and more leisure time for the masses. 

That the reduction of the work-period would be unwholesome 
and increase vice, crime, and degeneracy is not solely a notion 
of this generation. Every demand for shorter hours, twelve to ten, 
ten to nine, nine to eight, has been accompanied by pessimistic 
prophecies. It has been urged that the history of Greece and 
Rome supports the argument that slavery with the accompaniment 
of leisure for the slaveowners, sapped the virility of the masters. 
The influx of gold and silver into Spain after the discovery of 
America led the Spaniard to look with disdain upon mental and 
manual toil, and was, it is argued, a factor in the decline in the 
power and prestige of that nation. Americans in a “new era” of 
stockmarket speculation, 1927 to 1929, came to believe that watch¬ 
ing the ticker tape and playing golf paved the road to affluence 
and power. This famous period led many to believe that hard 


i8 


LABOR PROBLEMS 


work was no longer necessary for success. It was the epoch noted 
for “the rise of fools.” 

L. P. Jacks, the well-known English educator, presents the 
modern version of the evils accompanying increased leisure. He 
insists that we are “now threatened by a surplus of leisure time.” —* 
“Man was meant for a life of skillful activity; for a life of leisure, 
man, both rich and poor, is naturally unfitted, and he begins to 
degenerate biologically. The evils of enforced leisure are almost 
as bad as the evils of enforced labor, and it is really a new form 
of slavery.” 1 

In spite of this array of argument against the increase in leisure 
which the machine is making possible, the seeker after information 
should recall that primitive men did not work regularly or perform 
“hard work” — as we understand the term. The idea that work is 
a blessing is comparatively new in the world’s history; and it is 
not universally accepted. The emphasis upon regular and stren¬ 
uous work may possibly be the product of a combination of Puritan¬ 
ism, pioneer conditions, and the infancy of machine civilization. 
The maturity of the machine and the “menace of over-production” 
bid fair to cast further doubt upon making work an end in itself. 
In an enthusiastic attack upon “the gospel of work,” Professor 
Fairchild declares that in the maturity of the machine age “work 
must not only not be encouraged but not permitted unless there is 
some positive and demonstrable social good to be derived from it. 
Work is too potent a thing to be indulged in irresponsibly.” 2 
The calm individual may reasonably ask: Cannot work and 
leisure be combined with a decreasing amount of work as further 
progress occurs in the development of machinery so that social and 
individual uplift instead of degeneracy follows? May not leisure 
for the many be made to mean more of wholesome recreation, more 
of interest in art, music, and literature, some opportunity for quiet 
meditation, more of life and less of striving for a living? Leisure 
does not necessarily spell inactivity or vicious waste; but, in the 
words of Stuart Chase, “leisure without interest is a boomerang.” 
On the other hand, long hours of monotonous and disagreeable 
work do lead in a multitude of cases to unlovely or stunted person¬ 
alities. The patient, industrious man with the hoe, the wheel- 

1 Quoted in Commerce and Finance, May 13, 1931, p. 728. 

2 Fairchild, H. P., Harper’s Magazine , April, 1931, p. 571. 


THE SCIENTIFIC METHOD 


19 


barrow, or the adding machine is not the high-water mark of 
civilization. The machine age has also fostered a group of new 
occupations in which interest bulks large, such as research of many 
types, the professions of the architect and the engineer, personnel 
work, and the field of the business executive. Some work for all 
and considerable leisure for all are not inevitably the forerunners 
of social degeneracy. Since we are to have so much leisure time, 
education for active and wholesome leisure, for an avocation as 
well as for a vocation, becomes imperative. 

In the machine age, individuals do little for themselves. Services 
of a great variety are offered to us — from bankers to shoe polishers, 
from hairdressers to house furnishers, from professional amusers 
to hospital clinics. Food, clothing, shelter, amusement, and healing 
are provided by special groups. Day by day, men are becoming 
less independent and more interdependent. The American is losing 
resourcefulness. We cannot entertain ourselves; we must be 
amused by others, by paid entertainers. It has been suggested 
that “we are becoming a land of lookers-on.” There are, however, 
indications that we are becoming more interested in playing games 
ourselves, and less devoted to sitting on the sidelines watching 
others play. 

Rapid communication and transportation are enlarging the area 
in which obligation is felt for others, within which mutual aid is im¬ 
perative. Our neighbors may live at a great distance measured in 
miles. But it is difficult for our sense of obligation or the willingness 
to cooperate to expand as rapidly as our contacts increase. Tech¬ 
nological achievements seem also to have been accompanied in re¬ 
cent years in the United States by a rise in the tide of lawlessness. 

Since the World War the movement toward concentration in 
industry has progressed rapidly. Mergers of the horizontal, verti¬ 
cal, and circular types are the order of the day. A careful study of 
the consolidation movement led to the following significant esti¬ 
mate. The two hundred largest non-financial corporations in 1927 
controlled over 45 per cent of the assets of such corporations, 
40 per cent of the corporate income of the same, 35 per cent of all 
business wealth, and 15 to 20 per cent of the entire national wealth. 
If recent rates of growth continue, in 1950, 80 per cent of all non- 
financial corporate wealth will be in the hands of 200 corporations. 1 

1 Means, G. C., American Economic Review, March, 1931, p. 10. 


20 


LABOR PROBLEMS 


There is also a wide distribution of stock ownership. Corporations 
boasting of thousands of stockholders are a multitude. Many of 
these stockholders are inactive, absentee owners who sign proxies 
and draw dividends, if dividends are declared. They take no part 
in the management; they make no decisions as to business policies. 
By means of the proxy system of voting corporate stock, holding 
corporations, investment trusts of the management type, and other 
devices, the control of many corporations having a wide distribu¬ 
tion of stock is actually in the hands of a small group. The 
manager of a large corporation is as a rule a man who owns little 
or no stock in the business he directs. Many of these men are 
beginning to look upon business as a profession and to be motivated 
in a degree by other incentives than profit-making, such as the 
desire for authority and prestige, and for the satisfaction of doing 
a good job in a skillful fashion. The march toward larger and 
larger business units has steadily pushed the small independent 
enterpriser out of business. He has become an employee in a 
large enterprise. The typical young man of today does not look 
forward to a career as the owner and manager of a small business; 
he hopes to obtain a salaried managerial position. 

RECENT PROGRESS 

Until the epoch-making Industrial Revolution beginning with 
the invention of textile machinery and the steam engine, progress 
or change in the methods of getting a living, and in relations with 
fellowmen went forward at a deliberate pace. One generation saw 
little modification. Conditions of living, ways of doing things, and 
methods of getting from one place to another, were nearly the 
same in old age as in youth. Only a hundred years ago the horse 
and the swift runner were the accepted means of rapid communica¬ 
tion. Solomon could send an order as rapidly as Wellington. 
Fifty years ago men drove horses slowly over dusty or muddy 
roads; today they go swiftly by automobile over paved highways, 
or more swiftly by aircraft. The fathers of men living today never 
saw an electric light, a telephone, an automobile, a mechanical 
refrigerator, or a radio. The movement of foodstuffs from any 
considerable distance is recent; a century ago foodstuffs had a 
purely local market. Washington’s Mount Vernon home was 


THE SCIENTIFIC METHOD 


21 


without stoves. The lighting, heating, and ventilating of buildings 
have been revolutionized within the memory of many of our 
citizens. The paved road stretching from ocean to ocean has 
come within the brief life of the automobile. 

In recent decades the tempo of life has been pitched so that a 
generation sees unprecedented modifications. Men and women 
of today are living in a rapidly changing environment. The current 
of events is running swiftly; the moving picture of life is speeded 
up. Hence the need of flexibility of mind, of adaptability, of a 
willingness to discard tradition without going off at a tangent. 
Large-scale industry may mean routine, but it is also coming to 
signify a flexible and shifting routine. Foresight and forecasts 
meet unusual obstacles. In a period of ceaseless and precipitous 
change, the foresight which makes possible worthwhile forecasts 
in the industrial world is rarely uncovered. The rapidity of change 
is making worthless much of vocational education. Broad founda¬ 
tions and adaptability are now the important elements in our 
educational program. Our educational institutions are called upon 
to do much more than train narrow specialists whose specialties 
may without warning become of historical importance only. 
America may be suffering from too rapid growth of a machine 
and power civilization. Perhaps unemployment and “the menace 
of plenty” are growing pains due to maladjustments incident to 
a rapidly developing machine age. 

Since mechanical science has outrun social science, since the 
engineer and the scientist have made possible the production of 
more goods than we are able or willing to purchase, the world 
needs applied economics. Our problem revolves around regulariza¬ 
tion of industry, security of jobs, reduction of unemployment, 
and the easing of the troubles due to maladjustments evolving 
out of rapid industrial and social change. It is concerned chiefly 
with Dean Donham’s intangibles — security, leisure, and self- 
respect. 

Within 150 or 200 years the conclusion has been reached that 
it is possible to direct invention and the increase in physical pro¬ 
ductivity by means of scientific methods and the exercise of brain 
power. This age of world markets, railways, radios, electrical 
power distribution, skyscrapers, automobiles, and gigantic cor¬ 
porations is a testimonial to human inventiveness and genius. 


22 


LABOR PROBLEMS 


Nature — the primitive and the pioneer methods — has been 
greatly modified and, nearly all Americans will agree, improved. 
Is it not easy to reach the same conclusion in regard to prosperity 
and economic conditions? Is it not feasible to smooth out the 
business cycle and greatly to reduce unemployment? Yes, but 
it will require the application of inventiveness and adaptability 
in an unstable world. The Englishman, Sir Josiah Stamp, is re¬ 
ported to have remarked that “ this is the golden age of industrial 
achievement, but the stone age of economic thought.” The need 
of the hour is not so much for further accumulation of statistical 
data, although facts are needed, or an analysis of past events, 
as it is for a definite planning for modification of economic condi¬ 
tions on the basis of our knowledge of human motives and group 
reactions. 


THE ROLE OF THE EXPERT 

In 1931 and 1932, Americans were in the midst of the ruin caused 
by the worst industrial depression since 1893. Unemployment, 
idle and semi-idle plants, bread-lines, and suffering bulked large —• 
the full measure of the disaster was scarcely comprehended. 
Technical progress had far outrun our leadership in the economic 
and political field. An emergency, equal in many respects to a 
war, confronted the nation. To follow the old routes, even with 
palliative improvements, the voice of history tells us, will lead to 
another, and possibly worse, depression in the near future. The 
more intricate our industrial and economic mechanism, the greater 
the danger of muddling through. America is in dire need of the 
vigor and the initiative of her pioneers joined with the brain power 
of experts in technology and economics to blaze a trail to a new 
era in production and distribution, toward an epoch in which over¬ 
production and gaunt want will not live in the same community, 
toward an era of greater leisure, of closer approximation to equality 
of opportunity, and of more universal enjoyment of life. 

The United States has certain definite assets as a nation — 
machinery, natural resources, excellent labor power, managerial 
ability of no mean order, and technical skill. But, recently, we 
have made a sad mess of it. The nation is in dire need of regular 
and full employment of all workers who are able and willing to 
work, of industrial coordination to prevent over-development in 


THE SCIENTIFIC METHOD 


23 


certain lines, of the further reduction of waste, of the reduction of 
stock-market gambling, of better training of workers in order that 
they may be more adaptable, of a building program for the elimina¬ 
tion of slums and the improvement of housing conditions for the 
great rank and file. The prime demand of the hour is for human 
engineers and economic experts with a social vision who can reduce 
the floods of misery — unemployment and poverty — which peri¬ 
odically overwhelm the nation and the world. 

The main roads which may be followed in an emergency like that 
of 1931 are: 4 1 ) Let matters take their course. This undoubtedly 
means chaos. (2) Business men through organization into some 
form of trade associations may be able to coordinate industry and 
check over-development and serious industrial maladjustments. 
At present, unfortunately, there are no clear indications that 
business, unaided by governmental assistance and coercion, may 
with reason be expected to go far toward industrial coordination 
on a national or an international scale. (3) Accept a dictatorship, 
— Fascist or Communist. Dictatorships do not appeal to the 
American people. (4) Accept the remedy of the Socialists — gov¬ 
ernmental control and operation of important industries. To place 
all important industrial units in the hands of the government 
seems likely to the non-Socialist to lead to disaster and inefficiency. 
(5) The necessary increase in industrial coordination may be ob¬ 
tained by means of pressure — regulation, information, and other 
means — on the part of governmental authority, by teamwork 
between industry and government. It is this road leading toward 
a planned economy which will be given a brief survey. To give 
detailed consideration to the various items in a projected program 
for coordinating industrial operations would carry us far beyond 
the field of this volume. 

It is often urged that a planned or coordinated economy is in¬ 
compatible with democracy. Must a planned economy mean 
either a Communist or a Fascist dictatorship? If democracy be 
defined in the terms of the frontier, if it means laissez faire-ism, 
extreme individualism, and much voting, the answer is, doubtless, 
yes. But society is no longer in the pioneer stage; the frontier has 
been in a large measure erased. Liberty and democracy must take 
into account the presence of many persons in the business world 
and varied contacts with others in the social world. Isolation is 


24 


LABOR PROBLEMS 


of the past. Liberty no longer means the right to run a business 
exactly as the management pleases. It does mean running within 
the grooves fashioned for community safety and well-being. To 
tell a man that he cannot carry concealed weapons, or drive an 
automobile in traffic when he is drunk, or run a railway without 
reference to the Interstate Commerce Commission, is not depriving 
him of liberty in any sense except that of anarchy and of social 
chaos. Neither is the city manager plan of municipal government 
necessarily undemocratic; liberty and democracy do not consist 
in voting for many officials at frequent intervals. Planning doubt¬ 
less will bring in its train red tape; it will inevitably place some 
check upon individual initiative. On the other hand, unplanned 
capitalism and rugged individualism were spelling business chaos 
in 1932. 

The American industrial edifice is a haphazard product. The 
country was settled, cities built, and industries developed without 
a definite plan or program. In pioneer America before the maturity 
of the machine age, this gave free play to initiative and inventive¬ 
ness. But as the nation has passed into the maturity of the 
machine age, as localism and economic independence have given 
way to national and even to world markets, and to interdependence, 
the evils of unrestricted competition become more and more ap¬ 
parent. Each unit in industry continues to go ahead producing 
without adequate regard for what other units are producing or for 
the total probable demand. As a whole, industry is as planless as 
in a simpler economy, and business does not seem able or willing to 
change the situation. The much-needed coordinating element 
must evidently be supplied, whether we do or do not like it, by 
governmental action. Industry should, in the interests of economy, 
be guided by some responsible and expert agency toward the 
“scientific use of mechanical energy to supply basic economic 
needs.” In the interests of national economy, the engineer instead 
of the speculator should dominate industry. The problem of plan¬ 
ning within a single factory unit, or group of units, has been solved 
quite satisfactorily. The larger task suggested above is now before 
us. “What earlier generations left to the whim of the individual, 
society in the future will decide scientifically in accordance with 
technical rules.” 1 Planning “is a method, a technique. It is the 
1 Siegfried, A., America Comes of Age , p. 174. 


THE SCIENTIFIC METHOD 


25 


substitution of research, foresight, and control for ignorance, guess, 
and particularistic chaos. Scientific management is its name when 
applied to individual enterprises.” 1 

REFERENCES 

Beard, Charles A., Toward Civilization 
-, Whither Mankind 

Fairchild, H. P., Harper’s Magazine, April, 1931 
Hansen, A. H., Economic Stabilization in an Unbalanced World, Chaps. 
21-24 

Mazur, Paul M., New Roads to Prosperity 

“National and World Planning,” Annals of the American Academy of 
Political and Social Science, July, 1932 
Randall, J. H., Our Changing Civilization 

Recent Economic Changes, issued by the National Bureau of Economic 
Research 

Siegfried, A., America Comes of Age 
Sockman, R. W., Harper’s Magazine, Feb., 1931 
Thomas, Norman, America’s Way Out 
Tugwell, Rexford G., Industry’s Coming of Age 
Wissler, W., Business Administration 

1 Editorial, The New Republic, Sept. 16, 1931. 


CHAPTER II 


THE HISTORICAL BACKGROUND OF THE 
LABOR MOVEMENT 

THE STRUGGLE FOR LIFE 

The story of the slow and often painful progress of mankind from 
the time of the earliest of primitive men up to the complex and 
interdependent modern era is a fascinating and instructive tale. 
The primitive man was scarcely to be distinguished from the 
higher animals of the period. He obtained his food as did the 
animals by appropriating whatever nature provided. He gathered 
nuts and fruit; he attacked small animals and caught fish with 
his naked hands. All of his food was eaten raw. Weaponless and 
naked, the primitive man was ever in danger of attacks from ani¬ 
mals and other men; famine and extremes of heat and cold were 
difficult to avoid. He had not learned to cope with nature; it 
overpowered him. The difference between the first type of human 
beings and the distinguished, learned, and fastidious of the present 
generation seems great. Yet, the latter only exists because of the 
prior existence and effort of countless generations of forgotten 
primitive men and women. The animals and our primitive an¬ 
cestors constantly faced the probability of violent death. In the 
words of President Roosevelt, “ death by violence, death by cold, 
death by starvation — these are the normal endings of the stately 
and beautiful creatures of the wilderness.” In like manner our 
primitive ancestors met death. Changing conditions and new 
environments caused types to disappear which were unsuited to 
the new conditions, and fostered new types. Life was, indeed, a 
bitter struggle. 

The characteristics of the primitive man — those deep-seated 
instincts over which civilization has laid a thin veneer often called 
culture — were developed under the dangerous conditions of prime¬ 
val life. This painful and dangerous life tended to develop unlovely 
personal characteristics. Plants growing in the desert are bitter, 

26 


HISTORICAL BACKGROUND 


27 


poisonous, or spiny. These are nature’s provisions for self-defense. 
In like manner, cruelty and aggressiveness were essential to survival 
in the early strenuous life of mankind. A war, the sinking of a 
ship, or a fire in a crowded theater shows clearly that in modern 
men are many “savage survivals.” The way in which men behave 
or act in the working or leisure period depends in no small measure 
upon the more or less instinctive impulses which the race has 
inherited from the long distant past. To understand the present 
we must know something about the way the race has climbed to 
its present position. 

The long and fierce struggle for existence in the face of ever¬ 
present dangers has thoroughly bred into mankind a fighting 
spirit. The pugnacious tribes which were able, however, to inhibit 
fighting among themselves, defeated other groups, survived and 
passed on their characteristics to succeeding generations. Today, 
the hope of the world is. in building upon the past. It is not in 
eliminating the pugnacious spirit, the fierce spirit of rivalry; but 
it is in directing this spirit into channels which make for constructive 
endeavor rather than for war, slaughter, and destruction. Sport 
and industry offer opportunities for beneficial rivalry. Can rivalry 
to produce be made as alluring as rivalry to destroy? Since wild 
animals have been domesticated, there is hope that men may yet 
cease to war with each other even as the duel and the feud have 
practically passed off from the stage of human endeavor. 

Modern life rests upon unnumbered generations of human beings. 
Each new generation steps ahead, if progress be made, by using 
the results and the contributions of preceding generations. An 
orator some years ago in speaking to a graduating class, told the 
story in the following graphic fashion: “It is as if a torch- 
bearer began millions of years ago running down the ages with his 
light at first but a feeble spark, which as he fell breathless he passed 
to another and he in turn to another, the torch growing and flaming 
more brightly until at last it has been committed to our hands . . .” 
The orator in his enthusiasm forgot that progress is by no means 
so constant and smooth as his word picture indicated. Many and 
many a time in the long life of the old world the torch has flamed 
lower and lower instead of higher and higher. Progress has been 
intermittent as well as slow. Nearly all peoples and all generations 
like the old rather than the new. “We are geared to go round 


28 


LABOR PROBLEMS 


and round” instead of upward and onward toward a Utopia or a 
Heaven on earth. Civilization is a hard-won area in the darkness 
of savagery; and it is easily lost. Eternal vigilance is the price 
of civilization as well as of liberty. “ Civilizations are no new 
thing. They loom mysteriously, the one behind the other, like 
mountain peaks which we lose in the mists of history, legend, 
myth, ruin, and vestige, far beyond the reach of the remotest 
evidence.” Progress has followed a winding and difficult path 
which many times has led back almost to a place reached genera¬ 
tions before. 

It is very difficult for us today, possessing a rich social inheritance, 
to understand the difficulties and dangers which confronted the 
primitive man. At first, man had few or no tools and weapons; 
he did not know about fire; and he did not possess a dish or con¬ 
tainer of any sort except the cocoanut shell and a depression in a 
stone. The primitive man originally was not blessed or cumbered 
with anything “that we should recognize as language, religion, 
conscience and conscience code, government, economic art, super¬ 
stition,” or science. The primitive man had little or no clothing 
and no shelter except caves, rocks, and trees. By a slow process 
of discovery and invention under the spur of danger and necessity, 
mankind after thousands of years lifted itself up to the level of 
the ancient world of fragmentary historical records. 

Women were certainly the first industrial workers and the first 
agriculturalists. The primitive men hunted, fished, and battled 
with other men; they also made rudimentary boats and wrought 
weapons out of metals, stone, and bone. They experienced the 
unusual; their life was punctuated with climaxes; they were the 
early inventors. Women led a quieter and more prosaic life; 
and, as a consequence, they did little experimenting or inventing. 

Human beings have been spurred on to new methods of doing 
work, to inventions of various kinds, by two dissimilar circum¬ 
stances—wants and dramatic occasions. “Attention is the mother 
of invention; want is its grandmother.” Hunger was a fierce want 
which often focused the attention of the reluctant primitive in¬ 
dividual upon means of satisfaction. Fear led to united activities, 
to religious ceremonials and sacrifices, and to other institutional 
practices. Wants finding expression in gregariousness, curiosity, 
possession, artistic endeavors, and the spirit of adventure have 


HISTORICAL BACKGROUND 


29 

been potent forces in the evolution of art, music, the collection of 
trophies display, and so on through a long list. 

The modern world is overlaid with much of routine and regular¬ 
ity; but the primitive hunters and fighters knew little of repetition. 
Their lives were unpleasantly, but picturesquely, punctuated by 
crises or climaxes. In the words of Professor S. N. Patten, “the 
climaxes of the primitive world were in the form of bears, lions, 
famine, earthquakes, disease, and other crude and forceful shocks 
with which the primitive world was overstocked. Every day 
had its intense moments when real dangers had to be warded off, 
and its victories that gave immediate gratification. In these mo¬ 
ments of climax the intensity of life gained at the expense of its 
quantity, and under its influences men were transformed from 
cowardly brutes into heroes and masters of nature.” Occasions 
of this sort were fertile sources of inventions. In a crisis when life 
and limb are at stake a man’s brain becomes active and the atten¬ 
tion is unwaveringly focused upon the ways and means of warding 
off impending danger, of turning apparent defeat into victory. 
Changes in climate, growth of population, and migration to new 
areas also occasioned less spectacular and stirring, but more vital 
crises in the life of a group. New modes of living, a new diet, 
different clothes, new ways of hunting, and scores of adjustments 
and inventions must be forthcoming — if the group survived. 


INSTITUTIONS AND RIGHTS 

Property rights play an important role in the progress of human 
endeavor. The primitive savage recognized property in certain 
personal ornaments and weapons. In the pastoral stage or nomadic 
stage, flocks and herds became the chief kind of property. Property 
in land did not appear until the agricultural stage. It was difficult 
for the men of primeval times to differentiate between animals 
and inanimate objects. Everything that moved was thought to 
be alive. In like manner, it was probably difficult for primitive 
man clearly to distinguish between himself and certain of his 
belongings. “A savage is recognized by his weapons and orna¬ 
ments as well as by his stature or other bodily traits.” 

Presently, primitive men began to recognize the right of the man 
who first found a bunch of bananas, a nut tree, or a store of honey, 


30 


LABOR PROBLEMS 


to the bananas or the nuts when ripe and to the honey when fully 
prepared. The savage put a distinguishing mark upon his dis¬ 
covery and this mark came to be respected. Much of property 
was considered to be communal. A hunter did not regard as be¬ 
longing to him individually the game he had killed while hunting. 
The first sort of exchange or trade was doubtless between members 
of different tribes rather than within a group. In short, foreign 
commerce is older than domestic trade. 

After the cultivation of land began, the family planting seed must 
maintain control over the ground planted until after the harvest 
or lose the reward for its work and sacrifice. Good cultivation soon 
necessitated clearing or draining. More than one season was 
requisite to reap the full results of one’s toil. Consequently, 
there gradually grew up the custom of considering that the cul¬ 
tivator of a field had special rights thereto. After many vicissi¬ 
tudes, this blossomed out into private ownership of land as we of 
today understand it. One of the institutions which played a 
large part in transforming the primitive hunter into the industrial 
worker of today is slavery. Slavery was as characteristic of ancient 
times as the wage system is of the modern period. An institution 
or method of doing a considerable share of the world’s work which 
persists as long as did slavery must have possessed some virtues 
at certain periods in the history of mankind. In the social world 
as in the realm of physical forces there is a phenomenon known 
as inertia. We are all familiar with the fact that a heavy body is 
difficult to set in motion; but, when once started, it tends to con¬ 
tinue in a straight line. Likewise, an institution — slavery, the 
church, a banking system, a form of government — is difficult to 
organize; able teachers or social inventors are necessary. But 
after the institution is well developed and its rules and customs 
crystallized, it tends to persist after its work is actually accom¬ 
plished. Institutions which serve a useful purpose in one genera¬ 
tion or age may be useless or positively detrimental in another 
under quite different conditions and circumstances. 

An analysis of slavery as an institution leads to the conclusion 
that when first invented, it constituted a step in human progress 
toward modern civilization. Slavery is certainly an improvement 
over cannibalism, which in many instances preceded the enslave¬ 
ment of the vanquished. But such an analysis also shows quite 


HISTORICAL BACKGROUND 


31 


conclusively that slavery persisted after its usefulness was a matter 
of history. It is possible that the first form of slavery arose within 
the family circle. The father, the “old man of the squatting 
place,” was probably an autocrat or a slave driver in his relations 
with his wives and children. But the form of slavery with which 
we are historically familiar grew out of war and conquest. At 
first no captives were taken in tribal battles. The vanquished were 
slaughtered and frequently their flesh was eaten. A slave would 
have meant additional mouths to feed; a dead enemy, on the 
other hand, helped to furnish a food supply. Except possibly 
within the family slavery was not found in the hunting stage. 
To force a slave to hunt for the benefit of his captors would have 
been dangerous because weapons must have been given to the 
captive. He might suddenly attack his captor, or, while hunting, 
easily escape. Among the pastoral people, adult male slaves were 
not especially useful to their masters. In the hunting and in the 
pastoral stages women and children were sometimes enslaved. 
The master would have greater control over the women and chil¬ 
dren of his household. 

After the agricultural stage was reached, captives could be put 
to work tilling the soil and doing other kinds of manual labor. 
Tools and implements, instead of weapons, were placed in their 
hands. In some cases the captives were maimed or crippled so 
that it would be difficult for them successfully to attack their 
masters or to escape from captivity. Certain captives of excep¬ 
tional ability were also enslaved. Some of the well-known char¬ 
acters of ancient times were slaves. In the families of the leaders, 
presently, the women were released from hard labor by the intro¬ 
duction of slave labor. Class demarcations were more and more 
clearly drawn. The children of slaves were also slaves. Later 
other methods of enslavement appeared. Debtors were made the 
slaves of their creditors. Parents could sell their children into 
slavery. A free man in poverty might sell himself into slavery. 

THE INDUSTRIAL LITE OF THE ANCIENT WORLD 

The chief beneficial effects of slavery and serfdom in the Ancient 
World may be summed up under two heads: it gave to generations 
of mankind a needed drill and discipline in regular work, and it 


32 


LABOR PROBLEMS 


allowed certain privileged groups to become a leisure class and to 
develop art, literature, philosophy, and science in the era before the 
coming of machinery and the utilization of steam. In turning the 
attention to the desirable effects of slavery, it is not the aim to 
obscure the seamy and repulsive side of this ancient institution. 
Slavery was a harsh system. It did not mete out justice to the 
heavily burdened, and it did result in giving special advantages to 
a few. Ancient civilization rested on the backs of slaves. The art, 
the architecture, and the literature of the Ancient World could 
not have come into existence except for slavery or some analogous 
scheme of exploitation. We of today owe much to the despised 
and mistreated generations of slaves of the Ancient World. Much 
as twentieth century ideas of justice may condemn the system, 
we have profited by it. 

To change the primeval savage without the faintest concept of 
regularity or of responsibility into the industrial and agricultural 
worker of today is a job requiring generations of severe taskmasters. 
Slavery, serfdom, and allied systems did domesticate the primeval 
savage. This was accomplished at great cost in suffering; but it 
was done. And the wage system continued the process. Slavery 
enabled the conquering or master groups to grasp a modicum of 
luxury and leisure. The methods of production were so crude 
that only a small surplus over the absolute necessities of living 
was produced. This surplus was seized by the slave owners. 
Certain fortunate members of the privileged groups were enabled 
to devote their attention to cultural pursuits or to dissipation. 
They were released from the hard grind of obtaining a living. Out 
of this leisure class maintained by the efforts of slaves and semi¬ 
slaves came the culture and civilization, as well as much of the 
evil, of the Ancient World. The great mass of the people of ancient 
times, whether they be called common men, peasants, serfs, or 
slaves, were ever in poverty; suffering and hardship were the 
inseparable portions of their daily life, but the glory and magnifi¬ 
cence of the Ancient World were the products of the “ceaseless toil, 
infinite discomfort, and downright grinding misery for the masses.” 

Human nature and human endurance have changed little. The 
men of the Ancient World, like those of today, were actuated by 
the spur of ambition, love, jealousy, hate, love of power, joy of 
acquisition. The great difference between the Ancient World and 


HISTORICAL BACKGROUND 


33 


the twentieth century is to be found in material and scientific 
achievements; it is registered in cities, in corporations and financial 
institutions, in productive proficiency, in the marvels of modern 
transportation, and in the accumulating of knowledge. The mod¬ 
ern man is much more dependent upon the functioning of distant 
workers and mechanical contrivances than was the man of the 
Ancient World, of the Middle Ages, or of pioneer America. The 
food we eat, the clothing we wear and the necessities, comforts, 
and luxuries we enjoy are the products of a great and complicated 
mechanism — modern business. Even in the most highly de¬ 
veloped nations of the Ancient World this dependence was much 
less; but it was doubtless greater in Rome than in the Europe of 
the Dark Ages or in the case of the isolated pioneer. The over¬ 
shadowing importance of the general public, the bystander, is a 
phenomenon of recent decades. The selfishness of the individual 
and the isolation of nations are perforce being subjected to pressure 
unknown in preceding ages; and the final results are as yet matters 
of conjecture. 

In Rome and, perhaps, in other countries of the Ancient World, 
certain groups of working people who were not slaves were or¬ 
ganized. These organizations among the ancient lowly bear cer¬ 
tain resemblances to the gilds of the Middle Ages or to modern 
trade unions. In many cases, these organizations of ancient crafts¬ 
men seemed to have functioned chiefly for religious or political 
purposes, for social activities, or for insurance features. These 
gilds or unions made little or no attempt to raise wages, improve 
working conditions, limit the number of apprentices, or restrict 
the output of the worker. According to one authority on Roman 
history, “the Roman gilds were social fraternities rather than 
economic units.” One explanation for the disuse of economic 
weapons is connected with the influence of slavery. If freemen 
demanded too much, slaves could be utilized even in the skilled 
trades. Authorities differ as to the use of the strike. However, 
it is quite possible that different writers are concerned with dif¬ 
ferent centuries or places. A spokesman of the American trade 
unionist, John P. Frey, writes of Rome: “Strikes were frequent, 
injunctions were issued against strikers; conspiracy laws were 
enacted; contractors were enabled to use slave and contract con¬ 
vict labor in direct competition with the labor of freemen; strikers 


34 


LABOR PROBLEMS 


were punished without mercy, the militia being used to break 
up the strikes; and many unions in time were forced to hide their 
true character under the guise of fraternal and burial societies, 
as was done by the early unions in Great Britain.” In the long 
list of Roman gilds or trade unions may be mentioned those of 
goldsmiths, coppersmiths, blacksmiths, wagon-makers, builders, 
potters, dyers, leather workers, tanners, plasterers, and pavers. 
Roman armor and Roman weapons were “ union-made ”; there 
were organizations of teamsters, boatmen, sailors, and fishermen. 
As early “as 43 b.c., the pall-bearers of Rome belonged to a kind 
of organization” and bitterly resented non-union pall-bearers at 
funerals — a procedure quite modern. In the ruins of Pompeii 
were found certain posters — scratches or marks on walls — giving 
mute testimony to the activities of ancient organizations of working¬ 
men. It is clear that there have been labor problems and class 
struggles between the working and slave class and the ruling or 
privileged class for indefinite centuries. The labor problem is 
not a new problem. But in the Ancient World it was predomi¬ 
nately a slave problem; in the modern world it is a wage worker- 
employer problem. 


THE MEDIEVAL PERIOD 

Historians generally fix upon the year 476 a.d. as the date of 
the fall of the Roman Empire and the opening of the Middle Ages. 
This period was one of chaos. The inrush of barbarian groups 
threw Western Europe into great confusion. The so-called “Dark 
Ages” followed. Out of this confusion and terror finally emerged 
the feudal system. Many writers have idealized the medieval 
period. It was the age of chivalry and scholasticism, the period of 
cathedrals and monasteries, the golden age of fixity and content¬ 
ment; but such accounts overlook the turmoil of petty wars, the 
localism, the hardships, and the knavery of the period. The feudal 
and gild systems are the industrial institutions characteristic of 
the Middle Ages. It is very difficult for us of today to get a clear 
understanding of systems of getting a living and doing the world’s 
work which are quite dissimilar from those with which we are ac¬ 
customed. The feudal system, the gilds, governmental conditions, 
and trade relations within a country and between countries were 
markedly different from systems which now prevail. 


HISTORICAL BACKGROUND 


35 


The life and labor under the feudal system as it developed in 
England were characterized by simplicity. The population was 
predominantly rural, whereas England today is peopled largely 
by city dwellers. Even in the United States, according to the 
Census of 1930, more people live in cities and towns than in the 
rural districts. Serfs were born, lived, and died in a manorial village. 
They rarely or never visited another manor or came into touch 
with any other manner of living than the one customary in their 
manor. Travel was impracticable. Movement from one class to 
another was as difficult and infrequent as from one part of the 
country to another. Rigidity of social status was characteristic 
of feudalism. Each manor consumed what it produced; trading 
between manors or between manors and the towns was very little 
in evidence until after the time of the early Plantagenet kings. 
Little or no money was used. Presently traders began to make 
their way to certain towns, and craftsmen took up their residence 
in these towns. 

To these trading centers were brought the surplus products of 
the neighboring manors. The craftsmen of the towns made cloth, 
weapons, wood, metal and leather goods. Certain products of Con¬ 
tinental Europe and of the East began to be imported into Europe. 
For the regulation of this trade and for the protection of the home 
trader from those of other towns or from abroad, an organization 
called the merchant gild arose. The merchant gild included all 
the population of the towns engaged in trading. Sometimes mer¬ 
chants living outside of the town were admitted to membership 
in the gild. Nevertheless, citizenship in the town and membership 
in the gilds were practically identical. The gild was that portion 
of the town government which had charge of the regulation of 
commerce and industry. The gildsman of the medieval period, 
not unlike the merchant of today, wished to have a monopoly of 
the trade of his town. Foreigners — merchants from other towns 
or countries — were either not permitted to do business within 
the town or were allowed to do so only under strict regulation. 
The merchants of today, facing a different sort of competition, 
object strenuously to purchases made in another town or through 
a mail order house. Patronize your home merchant is today’s 
slogan; the gildsman asked that no outside merchants be allowed 
to come into his town to sell in competition with him. The cus- 


LABOR PROBLEMS 


36 

tomers of the early medieval period did not go to other towns to 
trade. Monopoly of trade looked as good to the medieval trades¬ 
men as it does to the business man today. 

At first the merchant was a craftsman as well as a merchant, but 
as time passed and commerce bulked larger, the merchant and the 
craftsman function became separated. Consequently, a new form 
of organization arose — the craft gild. The merchant gild appeared 
first and decayed before the craft gild. It seems likely that early 
in the history of the craft gilds, a man may have belonged to both 
types of gilds. The craft gilds developed as certain men began to 
devote their entire effort to the work of a trade or craft, leaving 
the producing and trading functions to other hands — that is, 
after the producing and trading functions were separated. The 
weavers were probably the first group of craftsmen to form a gild. 
These organizations, like the merchant gilds, were formed to give 
their members monopoly control over their trade in their own 
town. 

To become a full-fledged member of a craft gild, it was necessary 
to prove ability in a particular craft. The future master craftsman 
first served as an apprentice. After several years of satisfactory 
apprenticeship, he became a journeyman, and later he might be¬ 
come a master and participate in all of the activities of the gild. 
An apprentice was bound to the master for a number of years, 
lived in the latter’s house, and was expected to obey the orders of 
the master. On the other hand, the master agreed to provide for 
the apprentice’s food, clothing, and shelter, and to teach him the 
mysteries of the craft. The journeyman worked for wages in the 
little shop of the master workman. If the journeyman were 
frugal and saved his earnings, in due time he might open a small 
shop, hire a few journeymen, and take one or more apprentices. 
He would thus be a master. The gild regulations protected the 
members from those who had not gone through the years of ap¬ 
prenticeship, from the recalcitrants who refused to conform to the 
rules, and from outsiders coming from other towns. Only gildsmen 
were allowed to set up in business in the town. As the years passed, 
the gilds became more and more exclusive and monopolistic in 
character. By the fifteenth and sixteenth centuries the number 
of the unorganized merchants and craftsmen became considerable, 
and began to do business outside the town in localities not subject 


HISTORICAL BACKGROUND 


37 


to the control of the gilds. The strengthening of the powers of the 
king and of the central government also tended to weaken the 
gilds. The gilds held considerable property which was devoted 
chiefly to religious purposes. When Henry VIII and Edward VI 
confiscated the property of the religious bodies, they also took 
such property of the gilds as they claimed was used for religious 
purposes. Under these attacks the gilds weakened and gradually 
disappeared. Localism in government and in industrial regulation 
gave way to national control. The signs of a new era appeared on 
all sides. 

REFERENCES 

Ely, R. T., Evolution of Industrial Society, Chaps. 1-5 
Hobson, J. A., Evolution of Modern Capitalism 

Marshall, L. C., and Lyon, L. S., Our Economic Organization , Chaps. 3-5 
Ward, C. O., The Ancient Lowly 
Wells, H. G., Outline of History 


CHAPTER III 


EARLY HISTORY OF THE AMERICAN LABOR 
MOVEMENT 

THE WORKERS OE THE COLONIAL AND 
REVOLUTIONARY PERIODS 

Following the sketchy outline of early industrial progress, the 
attention may now be directed to a brief review of the development 
of the labor problem in the United States. The history of America 
unfolds as a rapidly moving panorama the evolution and decline 
of social and industrial systems similar to those which have been 
more slowly and obscurely unrolled in the other portions of the 
globe. The movement of population from a relatively densely 
populated territory to a vast new country possessing a rich and 
virgin soil invariably causes the settlers to retrogress in the social 
and industrial scale. The clock of progress is temporarily turned 
backward. Necessity forces the newcomers to adopt customs and 
methods of living and of gaining a livelihood which their ancestors 
had discarded. The pioneers of New England were obliged to live 
lives of great simplicity. No other kind of living was possible. 
Many old and forgotten social and industrial difficulties and prob¬ 
lems reappear when a new country is being populated and ex¬ 
ploited. As the American pioneers possessed the knowledge and 
experience of the centuries which had passed since Europeans out¬ 
grew primitive barbarism, the march of institutions in the New 
World did not follow with exactitude the course of development dis¬ 
closed in European history. New elements were introduced into 
the problem; the balance of social forces was different. 

When the movement of settlers to America began, Europe had 
for centuries abandoned the system of enslaving white men and 
women, and was passing out of feudalism. England, the most 
advanced nation of Europe, had practically emerged from the 
feudal period. Englishmen and other Europeans upon coming to 

38 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 39 

America were confronted by a new and peculiar situation. Land 
was abundant and labor was scarce; but the land could not be 
exploited and large profits derived without laborers who worked 
for small returns. Free and uncoerced laborers would demand high 
wages, or they would become independent laborers upon the land. 
The demand for controllable manual workers to do the rough and 
hard work of the pioneer agriculturalist soon became insistent. 
Old methods of controlling and exploiting laborers were readopted 
with alacrity. The indentured servant was the nearest approach 
to slavery for whites which the moral ideals of the period and the 
legal rights vouchsafed white workers permitted. But in the case 
of the black and the red man, the pressure of the demand for 
workers overcame all difficulties; and on the new continent slavery 
was reintroduced among transplanted European people. The per¬ 
sonal characteristics of the Indian prevented any extensive use 
of the red man as a slave; but the Negro proved to be docile and 
workable. After slavery was established, one major factor in its 
continuation was the great racial gulf between blacks and whites. 
The establishment and continuation of the slave system on the 
American continent centuries after its disappearance in northern 
Europe must be attributed to two cooperating causes: the presence 
of abundant land and the wide racial differences between masters 
and slaves. 

Differences in climatic conditions, the nature of the soil, and the 
character of the settlers in the various parts of the seaboard district 
led to significant differences in industrial conditions. The North 
was peopled by men and women coming from the portion of Eng¬ 
land which had progressed farthest from the old feudal regime 
toward modern industrial conditions; and slavery did not prove to 
be profitable in the North. The South, on the other hand, was 
populated by men of the older type and slavery was found to be 
profitable. The plantation system was essentially feudalistic; the 
small farm and the small manufacturing establishment of the North 
could not be efficiently worked by the slave or the serf. Two 
entirely different social and industrial systems were thus planted on 
American soil. The plantation system and Negro slavery were to 
hold the South in its grip until the last of the nineteenth century, 
and were to retard the growth of modern industry in that section. 
As long as slavery was continued the waves of industrial progress 


40 


LABOR PROBLEMS 


which swept over the North never reached beyond Mason and 
Dixon’s line. Until its awakening, during the last two or three 
decades, the South industrially was a belated section. 

Colonial America was preeminently a land of farmers. In the 
North, the small farm system and the scarcity of labor caused 
interdependence and cooperation to become characteristic of the 
people. In New England the lack of soil fertility caused many to 
turn their backs upon the farm and to become fishermen, sailors, 
and merchants. Each colonial farmer of the North was also a 
mechanic; he made the implements required upon the farm and 
attended to the necessary repairs. Cooperation between farmers 
took the form of exchange of services in harvesting or in house or 
barn “raisings.” The latter were important social events in which 
the spirit of rivalry or of emulation played an important role. 
Meals were served by the women, and the occasion was made a 
gala day for the neighborhood. Cloth was woven and the clothing 
for the family was manufactured in the home by the women and 
the children of the household. Sawmills, gristmills, tanneries, 
saltworks, and glassworks were early established on a humble 
scale. The sawmill was used in New England before it was intro¬ 
duced into England or Holland. Opposition to labor-saving ma¬ 
chines did not early develop in America because of the scarcity 
of labor and because each worker hoped soon to become a small 
farmer or a small manufacturer. In the South a very different 
situation existed. Each plantation was an isolated and nearly 
an independent economic unit. Such goods as were purchased 
came directly from Europe, and were landed on the wharves of 
the various plantations. Consequently, a merchant class did not 
develop in the colonial South. 

The manual laborers of the colonial period who were employed 
by employers or owners may be divided into three classes: wage 
earners, indentured servants, and slaves. The wage earners and 
indentured servants were found chiefly in the North; the majority 
of the slaves were located upon the plantations of the South. The 
Puritan of New England attempted to regulate minutely the 
private and public life of all the members of the community. 
The authorities of colonial New England passed regulations mi¬ 
nutely prescribing the mode of dress, the method of cutting hair, 
the entertainment of guests, the nature of amusements, the scale 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 41 

of prices and of wages, and various other details of social and 
industrial life. 

The Court of Assistants of the Massachusetts Bay Colony, at 
its first meeting in August, 1630, fixed the wages of artisans, such 
as carpenters, masons, sawyers. Soon after, these regulations were 
repealed. In 1633 another attempt was made to fix the wages of 
various journeymen at not more than two shillings (about fifty 
cents) per day, exclusive of board. Wages of inferior or unskilled 
workmen were to be rated by certain local authorities. Penalties 
were to be applied to both master and men for violating the law. 
In the same year a sweeping general order was promulgated fixing 
the price of provisions, clothing, tools, and other commodities. 
The General Court alleged that “the great extortion used by 
divers persons of little conscience” made this legislation impera¬ 
tive. In 1634 the penalty imposed upon those who paid more than 
the wages allowed by the colonial authorities was repealed, and a 
board of three men for each town was authorized to fix wages in 
case a dispute arose. This is perhaps the earliest legal provision 
for the establishment of a court of industrial arbitration on Amer¬ 
ican soil. In 1640 a considerable fall in prices occurred; and the 
General Court ordered wages reduced in proportion to the fall in 
prices. In Connecticut certain towns also fixed the wages of 
laborers. The frequent repetition of similar legislation indicates 
that it was in a large measure ineffectual, and such attempts finally 
ceased. During the Revolution, while the country was being 
flooded with paper money, other brief and ineffectual attempts 
were also made to fix prices. 

At the close of the Revolution wages were low and the price of 
the necessities of life high. The home of the workman was un¬ 
adorned and uninviting. “Sand sprinkled on the floor did duty 
as a carpet. There was no china in his cupboard, there were no 
prints on his wall. What a stove was he did not know, coal he had 
never seen, matches he had never heard of. . . . He rarely tasted 
fresh meat as often as once a week, and paid for it a much higher 
price than his posterity. ... If the food of an artisan would now 
be thought coarse, his clothes would be thought abominable. A 
pair of yellow buckskin or leathern breeches, a red flannel jacket, 
a checked shirt, a rusty felt hat cocked up at the corners, shoes of 
neat’s-skin set off by huge buckles of brass, and a leathern apron, 


42 


LABOR PROBLEMS 


comprised his scanty wardrobe. The leather he smeared with grease 
to keep it soft and flexible.” 1 

These were the conditions in the “good old times.” While the 
contrast between rich and poor may be more apparent today than 
a century ago, the average workingman of today can get more of 
the necessities and comforts of life than his predecessors of three or 
four generations ago. Absolutely, if not relatively, the working¬ 
men’s position has improved. The workman who got into debt 
was liable to imprisonment in vile prisons. The conditions in 
some of the colonial prisons beggar description. McMaster has 
pointed out that we of today feel more compassion “for a galled 
horse or a dog run over at a street-crossing than our great-grand¬ 
fathers felt for a woman beaten for cursing or a man imprisoned 
for debt.” The workers of the colonial and revolutionary period 
had little or no intellectual stimulus. Their environment was 
purely local; little or nothing was known of the outside world; 
and little opportunity was afforded for united action. The wage 
earners of this period were not factors in the political world. The 
wage earner without property was denied the right to vote. 

The gild system appeared in the colonies only in a rudimentary 
way. The first American gild seems to have been organized among 
the shoemakers of Boston. It was incorporated by the Massa¬ 
chusetts Bay Colony in 1648. The coopers were likewise organized 
as a gild. The shoemakers formed a gild for the chief purpose of 
controlling inferior workmen. The gild officers were given certain 
powers of inspection and of regulation, and they could penalize 
workers for any violation of the rules and regulations. The colonial 
authorities, however, retained the power to remedy abuses. The 
gild was organized during the process of “ transition from the stage 
of the itinerant shoemaker, working up the raw material belonging 
to his customer in the home of the latter, to the stage of the settled 
shoemaker, working up his own raw material in his own shop to 
the order of his customer.” 2 

In the eighteenth century a few organizations appear which bear 
the characteristic marks of the local trade union. Early in the 
century the ship calkers formed a “calkers club”; but the purposes 

1 McMaster, J. B., History of the People of the United States, Vol. 1, pp. 96-97. 

2 Commons, J. R., “American Shoemakers, 1648-1895,” Quarterly Journal 
of Economics, Vol. 23, p. 42. 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 43 


were primarily political, not economic. Temporary organizations 
or societies of printers were organized from time to time, beginning 
in New York City in 1776. “The Typographical Society” of that 
city was in existence from 1795 to 1797. Professor Commons calls 
the “Federal Society of Journeymen Cordwainers,” organized in 
Philadelphia in 1794, the first American trade union. This organi¬ 
zation was preceded by an employers’ association — the “Society 
of Master Cordwainers of the City of Philadelphia,” formed in 1789. 
The cordwainers held together for twelve years; in 1799 they con " 
ducted a strike of about ten weeks’ duration. The New York 
shipwrights formed a society in 1803; the carpenters of that city 
organized in 1806; and the tailors formed a union in the same year. 
The organizations of this period were weak, local, ephemeral, and 
few in number. Not until after the War of 1812 does the real 
history of American labor organizations actually begin. 


DEVELOPMENT OF THE FACTORY SYSTEM 

In the colonial and revolutionary period all industry was in the 
domestic or handicraft stage. Manufacture was carried on in 
the home or in small shops; it was still, as the derivation of the 
word indicates, the making of things by hand. The workers were 
isolated from each other or associated together in small groups. 
The worker usually owned his tools, and frequently the raw 
materials and the products of his labor. There was little or no 
division of labor, or use of power other than human brawn and 
muscle. In the factory system with which we are familiar today, 
many workers are associated together who do not own the tools or 
machines with which they work, the raw material which they form 
into finished or semi-finished products, or the products of their toil. 
Division of labor is often minute, and is always present. Or¬ 
ganization, systematization, and concentration are characteristic 
of the modern factory system. The worker is a wage earner; and, 
with rare exceptions, cannot pass from that rank to the coveted 
position of employer. Steam, gas, or water power, not human 
energy, is the motive force which drives the machines assembled in 
the factory. Since the adoption of the Constitution, the United 
States has passed through an industrial evolution which has dis¬ 
placed, except in the case of a few “belated” industries, the house- 


44 


LABOR PROBLEMS 


hold form of industry and substituted in its place a highly organized 
form of the factory system. 

The factory system has not evolved at a uniform pace in all 
portions of the industrial organism. Cotton manufacture was the 
first to pass from the household stage; and woolen manufacture 
followed closely in its footsteps. Certain industries are even now 
in the transitional stage, as, for example, the clothing industry, 
laundering, and cooking. England was the leader in the so-called 
Industrial Revolution. Beginning in the early portion of the second 
half of the eighteenth century, a series of inventions gave the 
impetus which led to the utilization of machinery on a large scale. 
The spinning machine was first invented; and a few years later 
a power-loom for weaving was perfected. The necessary mechan¬ 
ism for the advent of the factory system in the textile industry was 
now complete. 

England, through the use of this machinery, was given a point of 
vantage over the remainder of the world. Without the use of 
machinery, no nation could hope to compete successfully with the 
island kingdom. In order to retain this advantage, Parliament 
passed laws which prohibited the exportation of machines, tools, 
and models, and which made it a criminal offense to try to induce 
textile operatives to leave England. By means of these mercantilist 
policies, England was able to retard slightly the development of 
manufacture on this side of the Atlantic; but irrespective of the 
governmental policy, the growth of the factory system in the 
United States would have lagged behind the development in 
England. 

The first factory in the United States was erected for the purpose 
of manufacturing cotton goods at Beverly, Massachusetts, in the 
year 1787. This venture, as well as several others made in different 
places, was unsuccessful. The Slater factory at Pawtucket, Rhode 
Island, built in 1790, was the first successful venture. Samuel 
Slater, the “father of American manufacture,” had served as an 
apprentice at cotton spinning in England. Learning of the op¬ 
portunities in this country, he determined to cross the Atlantic, 
and to introduce improved spinning machinery on this side of the 
ocean. Slater was obliged to come without drawings or models; 
he constructed the machinery used in the Pawtucket mill aided 
only by his memory of the machines which he had operated in 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 45 


England. Development in the cotton industry was very slow for 
many years, as the importation of cotton goods from England was 
considerable. According to J. L. Bishop, in his History of American 
Manufactures , there were, in 1803, only four cotton mills in the 
entire United States. The early factories only had machinery for 
spinning. It was not until 1814 that Francis Lowell, practically 
independent of English aid, invented a power-loom which was 
installed in a factory at Waltham, Massachusetts. This was the 
first complete factory for the conversion of cotton into cloth erected 
in the United States. 

The woolen textile industry was the next to enter the factory 
stage. The iron industry developed quite slowly in the United 
States. The Embargo Act and the War of 1812, by reducing the 
importation of manufactured goods from England, gave a real 
impetus to the factory system in this country. The infant in¬ 
dustries were artificially stimulated. In 1831, it was estimated 
that not less than 29,000 men were employed in the manufacture 
of iron products. By 1850, the cotton and woolen factories of the 
United States gave employment to 140,000 persons. Factories and 
factory work were of significant industrial importance in the nation 
before the panic of 1857. 

RISE OT THE INDUSTRIAL CITIES 

The modern industrial city is a product of the factory system. 
Parallel with the development in manufacture moved the evolution 
of modern urban life with its many problems which are due to the 
dense population, the housing conditions, and the factory en¬ 
vironment. During the era of expansion in the development of the 
factory system the industrial or mill town of the modern type 
makes its first appearance; and the percentage of the total popula¬ 
tion living in cities increases. When the period of concentration is 
reached, the ratio of urban to the total population mounts rapidly 
upwards. The following table taken from the Reports of the Twelfth 
Census shows this movement very clearly: 


46 


LABOR PROBLEMS 


Per cent oe Total Population in Cities of 8000 or Over 


Census Years 

Number of Cities 

Per cent Urban of Total 

1790 

6 

3-4 

1800 

6 

4.0 

1810 

11 

4-9 

1820 

13 

4.9 

1830 

26 

5-7 

1840 

44 

8.5 

1850 

85 

12.5 

i860 

141 

16.1 


The movement towards the city begins to be very perceptible in 
the decade 1820-1830; and this period marks the definite and un¬ 
mistakable opening of the era of expansion in the textile industry. 
This phenomenon was in a large measure confined to the North 
Atlantic states, and was the most well defined in Massachusetts, 
Rhode Island, Connecticut, New York, and Pennsylvania. Ex¬ 
clusive of Maine and, perhaps, Vermont, the population of New 
England almost ceased to grow by 1816. The farming land had 
nearly all been occupied, and the surplus population was emigrating 
to other states. The rise of the new system of manufacture and 
the recovery from the depression following the War of 1812 saved 
New England from stagnation. From 1820 to 1850, the population 
of the mill towns of New England, New York, and Pennsylvania 
increased much more rapidly than did the total population. 

As people long accustomed to rural life were suddenly thrust into 
barrack-like homes in dreary mushroom factory towns, the now 
familiar evils of city life began to make their first appearance upon 
American soil. Pauperism, juvenile crime, woman and child labor 
in factories became well known. With the inhabitants massed 
together in the growing cities and towns, opportunities were not 
lacking for organization and agitation. The long struggle between 
the conservatives of the Atlantic coast region and the turbulent 
and individualistic frontiersmen of the uplands and the backwoods 
had finally forced the abolition in most of the Northern States of 
the old religious and property qualifications for the exercise of the 
suffrage. At a propitious time the democratic frontiersman placed 
the ballot in the hands of the newly created class of factory and 
town wage earners; and then the American wage earner appeared 
on the industrial and political horizon. 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 47 


ORIGIN OF UNIONISM 

The modern trade union seems to have originated in England. 
The craft gild of the Middle Ages is not the forerunner of union¬ 
ism. There were in the Middle Ages certain combinations of 
journeymen and laborers working for wages which may reasonably 
be considered as the predecessors of the trade unions of today. 
The Webbs find traces of such combinations of hired workers as 
early as the fourth quarter of the fourteenth century; but as long 
as nearly all workers hope soon to become masters, these combina¬ 
tions did not flourish or become permanent. The organization of 
wage workers into “durable combinations” preceded the develop¬ 
ment of the factory system in England. 1 It may be assumed that 
the modern labor movement began about the middle of the eight¬ 
eenth century. 

LABOR ORGANIZATIONS 

In the United States, before 1825, certain rudimentary labor 
organizations appeared from time to time, but these were purely 
local, ephemeral, and confined to members of one trade. The early 
isolated organizations were called trade societies. “ Modern trade- 
unionism as an industrial and political force,” writes Professor 
Commons, “ began with the coming together of previously existing 
societies from several trades to form a central body on the repre¬ 
sentative principle.” These were called trades’ unions, not trade 
unions. To the then largest city of the United States, Philadelphia, 
and not to England, as commonly stated, belongs the honor of being 
the birthplace of the modern trades’ union—that is, a union or as¬ 
sociation of trade unions or labor societies. The Mechanics’ Union 
of Trade Associations was organized in that city in 1827, and 
antedates by two years the first similar organization in England. 

During the succeeding ten years three forms of labor organiza¬ 
tions may be noticed: (1) The trades’ unions in different towns and 
cities. (2) The first form went into politics (1827-1831), and 
formed workingmen’s parties in various cities. (3) After the close 
of the rocket-like career of the workingmen’s parties, events moved 
slowly for a few years. Then, with the era of swiftly rising prices 
which preceded the panic of 1837, came the rapid growth of trades’ 
1 Webb, S. and B., History of Trade Unionism , Chap. 1. 


48 


LABOR PROBLEMS 


unions and the organization of several national trade unions and 
of the National Trades’ Union, which held three annual meetings 
in 1834, 1835, and 1836, and possibly one more in 1837. Practically 
nothing was known of this early ephemeral, but pretentious, na¬ 
tional organization until its history was laid bare as the result of 
the labors of Professor John R. 4 Commons. 

The inception of the first American labor movement was the 
natural, or rather inevitable, though direct, result of the aggrega¬ 
tion of workers in towns and in factories, and of the partial dis¬ 
placement of the domestic form of industrial organization by the 
factory and the contract system. The factory workers were not, 
however, the first organized; the first organizations were formed 
in the skilled trades. The growth of towns and the gradual im¬ 
provement of transportation facilities were extending the market 
area; and wealthy merchants were sending their wares to distant 
points. The men in the skilled trades were confronted by a new 
situation. City life and the steadily developing division of labor 
were modifying social conditions, were exaggerating and exposing 
to public gaze old evils such as pauperism, intemperance, and 
juvenile crime, and were producing evils hitherto unknown. Class 
demarcation was becoming sharper, and the workingmen were in 
a state of dissatisfaction and unrest. Leaders only were needed to 
convert this unrest into organized remedial effort. The working¬ 
men were firmly convinced that social and industrial conditions 
were awry; and every enthusiastic and persuasive would-be re¬ 
former was able to obtain a hearing and a following. This transi¬ 
tory period provided the properly prepared ground for the fitful 
and changeful policies which characterized its many reform move¬ 
ments. The student of mob or crowd psychology may find in this 
period a fruitful field for study. The workers passed from the 
trades’ union to the political party in a vain endeavor to mitigate 
the evils which loomed up before them. The frontier forced down 
the bars which had kept the small and the non-taxpayer from the 
ballot box; the workmen under the impulse of their leaders turned 
to political action. They demanded free schools, no imprisonment 
for debt, mechanics’ lien laws, and a ten-hour day; and they 
opposed special favors in the granting of charters and monopolies, 
the lottery system, the militia system as then in vogue, the auction 
system, and the exemption of church property from taxation. 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 49 


The first workingmen’s party appeared in Philadelphia in 1827 
or 1828; but the most important political movement occurred in 
New York City. The New York party was organized in the spring 
of 1829, elected a state assemblyman in the fall, was split into three 
fragments within a few months, put three tickets in the field in the 
fall of 1830, and disappeared from view the following spring. 
Organized ostensibly to prevent an attempt to lengthen the work¬ 
ing day, the party was first committed by an imperious leader to 
the doctrine of equal distribution of wealth and the abolition of 
inheritance; this leader was soon ousted, carrying with him only a 
handful of followers. Next came Robert Dale Owen and G. H. 
Evans; the latter was the editor of the famous labor paper, The 
Working Man’s Advocate. These two enthusiasts committed the 
party to an educational program. Free education in boarding 
schools, where all distinctions of rank or class were to be eliminated, 
was put forward as a panacea for all the evils of which the workers 
complained. Tammany Hall was then, as now, the powerful 
democratic organization of that city. The leaders of that political 
machine were thoroughly frightened by the results of the election 
of 1829, and proceeded to destroy the workingmen’s organization. 
So successful were they that within a few months Owen and Evans 
were forced out, carrying with them a considerable fraction of 
the entire party. Tammany now took up some of the planks in the 
platform of the conservative and most numerous branch of the 
party, and in 1831 the entire organization disappeared. The first 
American labor movement was disrupted by entering the political 
arena. 

This ephemeral labor party was not entirely useless. The chief 
effects may be briefly summarized as follows: (a) the passage of a 
mechanics’ lien law by the New York legislature. It was clearly 
for the purpose of placating the workingmen that this measure was 
supported and pushed through by Tammany, (b) The abolition 
of imprisonment for debt, by a law passed in the spring of 1831. 
The stand taken by the workingmen’s party hastened legislative 
action in this matter. ( c ) The appropriations for educational pur¬ 
poses in New York City increased very noticeably at this time. 
(d) When, in 1833-1837, the strong trade-union movement arose, 
the fate of the workingmen’s party was accepted as a conclusive 
argument against direct political effort. Hence the trade unions 


5o 


LABOR PROBLEMS 


kept aloof from party politics and merely questioned candidates 
as to their position on measures which were regarded as affecting 
the interests of labor. 1 

After the disruption of the workingmen’s parties, a period of in¬ 
action followed. But with the triumph of Jackson over the second 
United States Bank came a flood of paper money issued by the 
rejuvenated state or “wild cat” banks. With the inflation of the 
currency, prices went up by leaps and bounds; but wages lagged 
behind. The wage earners were caught like rats in a trap; the rise 
of prices was so rapid that escape to the frontier was impracticable. 
Wheat flour rose in New York City from $5 a barrel in 1834 to $12 
in March, 1837; in Baltimore from $6.75 on June 4, 1836, to 
$10.50 on December 17 of the same year. Edward Atkinson es¬ 
timated that the cost of living to the average workingman rose 
66 per cent from April, 1834, to October, 1836. Organization and 
strikes were the only available remedies. In 1835 a New York 
daily newspaper observed that “strikes were all the fashion.” 
The membership of the trades’ unions multiplied until the ratio of 
organized to unorganized wage earners in some cities was as high 
as or higher than at the present time. “Dues were increased and 
donations added to dues. Finally, the ominous sign of over¬ 
organization appeared. Jurisdictional struggles began. Black¬ 
smiths protested against horseshoers, and hand-loom weavers 
against factory weavers. These were not settled when the panic of 
1837 stopped everything, and the trades’ unions disappeared when 
the wage earners’ employment ceased.” The labor movement of 
this period of rising prices was premature. Financial conditions, 
not industrial evolution, were responsible for the rocket-like rise 
of the labor organizations. 

The period 1834-1837 was one of extraordinary trade-union 
activity. General Trades’ Unions were formed in the large cities. 
New York and Philadelphia had strong organizations. A con¬ 
temporary newspaper states that the Trades’ Union of Philadelphia 
consisted in 1836 “of forty-eight trade societies or associations, 
sovereign and independent in themselves, but bound by ties of 
honor and interest to support and assist each other in cases of 
aggression or danger.” Two of these societies boasted of a mem- 

1 Carlton, F. T., “The Workingmen’s Party of New York,” Political Science 
Quarterly, Vol. 22, p. 415. 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 51 

bership of over nine hundred each, and four of more than seven 
hundred each. Among the trade unions or labor societies belonging 
to the Trades’ Union were the Society of Journeymen Tailors, the 
Society of Cordwainers, the Journeymen Printers, the Society of 
Journeymen Hatters, and the Society of Cotton Spinners. A 
“Society of Female Operatives,” having a membership of about 
four hundred, is also reported from Philadelphia. This organiza¬ 
tion was similar to other trade societies. The Boston Trades’ 
Union, on July 4, 1834, had two thousand men in a procession. 
The printers organized societies in not less than twenty-four cities 
in the decade of the thirties. Catalogs of “rats” or non-union 
men are reported to have been published occasionally by the 
organized printers; and picketing was not unknown. In 1836 the 
New York General Trades’ Union complained that the employing 
leather dressers had declared for what we now call the “open 
shop,” and were refusing to hire men belonging to a labor organiza¬ 
tion. This was denounced as “an attempted violation of the 
constitutional and natural rights of American citizens.” Many 
of the methods used today by organized labor were employed by the 
ephemeral and premature unions of the thirties. 

Employers’ associations were formed to counteract the power of 
these newly organized unions. In New York City the curriers and 
leather dealers and the employing leather dressers were knit into 
such organizations. Members of these associations inveighed 
against labor organizations in a manner quite up to date. The 
unions were held to “invade the rights of employers” and to 
“compromise the rights of unorganized labor.” “If we desire 
to alter the whole genius of American society, — to resolve it into 
classes separated by barriers almost impassable, and to condemn 
the largest portion to lasting inferiority — we should certainly 
recommend some such expedient as trade unions.” These words 
sound as if they were written only yesterday by a member of an 
employers’ association hostile to organized labor. 

The following analysis of the forces which caused this remarkable 
outburst of activity on the part of labor organizations is from the 
pen of Professor Commons. “But it was not the cost of living that 
first demanded attention — it was the hours of labor and over-work. 
The feverish prosperity of bank inflation and the taste of unusual 
profits enticed employers to drive their workmen; and the long 


52 


LABOR PROBLEMS 


hours of labor which were welcomed as a boon in a time of de¬ 
pression became unbearable in time of prosperity. . . . The struggle 
centered in Philadelphia, where the trades’ union entered upon a 
career of success and enthusiasm. It had the support of physicians, 
lawyers, merchants, and politicians, and the year 1835 is memorable 
as the turning point from which dated the. establishment in this 
country of the ten-hour system.” 1 The strikes of 1836 were chiefly 
for higher wages and were the direct result of rising prices. 

The pioneer national organization of wage earners on American 
soil was the National Trades’ Union which first met in the city of 
New York in August, 1834. At this time it was estimated that 
there were 26,250 members of American trades’ unions. 

In New York and Brooklyn 11,500 In Baltimore. 3, 500 

Philadelphia. 6,000 Washington. 500 

Boston. 4,000 Newark. 750 

At the first convention about thirty delegates were present. The 
second convention also met in New York City, and was attended 
by forty-eight delegates. The third convention met in 1836 in 
Philadelphia. A fourth convention was called to meet in 1837, and 
it is probable that a few delegates attended, but with the panic, 
the national organization passed out of existence. The National 
Trades’ Union was a union of local unions and of the central trades’ 
unions in different cities. It began merely as an advisory body 
with no disciplinary powers; but in 1836 the constitution of the 
body was so changed as to allow it to exercise some authority over 
the bodies united in the national organization. 

The constitution of 1834 stated that the objects of the Union 
were to advance the moral, intellectual, and pecuniary interests of 
the workers, to disseminate information, to promote the establish¬ 
ment of trades’ unions, and to harmonize the efforts of the produc¬ 
tive classes. In 1835 provisions were inserted requiring each 
subordinate union to contribute to the national body two cents 
per month per member. Another clause declared all acts of the 
national body binding upon the various unions accepting the 
constitution. “In 1834 it had been a convention to promote agita¬ 
tion; in 1836 it had become a federation to support strikes.” The 
extreme pressure of rapidly rising prices caused a rapid evolution 
1 Documentary History of American Industrial Society , Vol. 5, pp. 33-34. 







EARLY HISTORY OF AMERICAN LABOR MOVEMENT 53 

of function. In 1834 resolutions were adopted favoring “an Equal, 
Universal, Republican system of Education,” demanding that the 
public lands be left open to actual settlers, deploring the evil con¬ 
dition of “male and female children employed in the cotton and 
woolen manufactories in this country,” and opposing special privi¬ 
leges for a “favored few.” In the convention of 1836 the following 
committees were appointed: trades’ union, education, state prison 
labor, factory system, female labor, and on unfinished business. 
The titles of these committees are significant as indicating the topics 
considered to be of great importance to the wage earners in 1836. 
A committee was also appointed on the ten-hour system on govern¬ 
ment works. This committee in a long report declared that the 
memorials of the ten-hour committee appointed in 1835 were 
treated contemptuously by Congress. It closed by recommending 
united action on the part of all trades’ unions in requesting the 
President of the United States to establish a ten-hour day for all 
government employees. In 1840 President Van Buren issued such 
an order. 

In 1836 at least five trades had formed national trade unions — 
that is, formed national organizations within a single trade. These 
trades were the cordwainers, the combmakers, the carpenters, the 
weavers, and the printers. Other organizations recognized the 
desirability of national organization. The printers held at least 
two annual meetings, in 1836 and 1837. 

The National Trades’ Union and the national trade unions of the 
thirties were national unions at least three decades ahead of their 
time. The railway and the telegraph had not yet extended the 
market area. Competition over wide areas was as yet little felt. 
Only the extraordinary increase in the cost of living in the years 
immediately preceding the panic of 1837 could bring into life even 
an ephemeral national organization. As soon as that pressure was 
removed the national organizations disappeared and were soon 
forgotten. 

Much antagonism between employers and employees and be¬ 
tween the rich and the poor was generated during this extraordinary 
epoch. A class consciousness which is scarcely exceeded in recent 
decades flashed into view during this spectacular struggle for 
higher wages. In one address to a labor society in 1835 is found the 
following gem: “Already has grasping avarice and monopoly 


54 


LABOR PROBLEMS 


shorn us of many of our rights, already has aristocracy reared its 
hideous form in our country, and is making rapid strides toward 
enslaving us forever.” The Working Maris Advocate had as one 
of its aims opposition to monopolies and all class exemptions. The 
associations of employers of the thirties were practically as bitter 
toward trade unions as any that exist today. For example, one 
resolved that the methods of the unionists were “most obnoxious, 
coercive, and detrimental to the peace, prosperity, and best interests 
of the community.” Another resolved “that the Trades’ Union 
is the growth of Monarchical Government, and ill adapted to our 
Republican Institutions.” 

A short period of rising prices dates from 1843. A few “spo¬ 
radic” unions were called into existence, and here and there minor 
strikes occurred. For the first time in American history the factory 
and the factory operative began to figure in labor disputes. Soon, 
however, the level of prices began to move downward, and labor 
agitations and organization assumed modified forms. From about 
1845 to 1851 purely trade-union methods were rarely employed; 
and the doctrine of class harmony was persistently preached. The 
main points in the labor demands were not wages and hours. The 
humanitarian element was in control; labor unionism and humani- 
tarianism were curiously mixed. Various Labor Congresses and 
Workingmen’s Associations were formed, and many organizations 
of women workers came into being. Certain humanitarian leaders 
like Horace Greeley, Brisbane, Dana, and Ripley, who were not of 
the wage-earning class, were prominent in the various organiza¬ 
tions. The New England Workingmen’s Association was organ¬ 
ized in the spring of 1845. Its object was declared to be “union 
for power, power to bless humanity.” In New York the National 
Reform Association was formed in 1844. This body wished to 
restore man to his “natural right to land.” The first Indus¬ 
trial Congress convened in New York City, October 12, 1845. 
George H. Evans, editor of The Working Maris Advocate of the 
early thirties, and then joint editor of another paper of the same 
name, was secretary. The Female Labor Reform Association of 
Lowell sent a representative. The Congress recommended the 
formation of three organizations: (1) Of “pure labor,” to be called 
the “Industrial Brotherhood.” No employers, overseers, or super¬ 
intendents were to be admitted to membership. Farmers were to 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 55 

be eligible. (2) “Young America,” all friends of the “just” rights 
of labor might join. (3) The “Industrial Sisterhood” was to 
include all females who desired to unite in “the righteous cause.” 
Commenting on the work of this Congress, Greeley said that a 
true Industrial Congress represented all classes. A second congress 
was held in 1847, and a third in 1850. 

There were few indications, in the period of twenty years be¬ 
tween the crises of 1837 and 1857, of a feeling of solidarity among 
wage earners — much less than in the short period of stress and of 
rising prices preceding the crises of 1837. In the decade of the 
fifties, however, indications are not lacking of the divorce of union¬ 
ism from humanitarianism. “Pure and simple” trade unionism 
began to appear. A magazine in 1853 stated: “Since our last, the 
expenses of living have been somewhat increased at nearly every 
point. The prices of sundry articles of general consumption have, 
it is true, been somewhat reduced, but most other avenues of 
expenditures have been widened. Labor of all kinds demands 
higher rewards, and in almost every branch of industry, organiza¬ 
tion, combinations, and in some cases ‘ strikes, ’ have been resorted 
to in order to obtain the desired advance.” 1 In the autumn of 
1853 an attempt was made to federate the unions of New York 
City. Only workingmen were entitled to act as delegates to the 
central body. 

All the labor movements of the pre-Civil War period were 
ephemeral and soon disintegrated. The chief reason for the lack of 
permanence may be summarized under five heads: (a) A strong 
and permanent labor organization is not to be anticipated while 
much practically free land can be obtained, and while it is possible 
for the efficient and ambitious employee to pass readily to the posi¬ 
tion of employer. Under such conditions class consciousness and 
the feeling of solidarity of interest among the workers do not 
readily develop to a sufficient degree to insure strong and permanent 
union organizations. ( b ) The attainment of many of the more 
moderate demands of the labor party and labor press, such as a 
mechanics’ lien law, abolition of imprisonment for debt, and in¬ 
creased taxation for the public schools, naturally reduced the 
number of active unionists and diminished the ardor of those 

1 Hunt's Magazine , April, 1853. See Documentary History of American In¬ 
dustrial Society, Vol. 8, p. 335. 


LABOR PROBLEMS 


56 

remaining in the organizations, (c) Coupled with this was the 
rising tide of the slavery agitation, which drew the attention 
from the demands of the workers and absorbed much of the vigor 
of the humanitarian leaders. (< d) The stigma of infidelity which 
became attached to the workingmen’s party was a serious handicap 
to that form of labor agitation. ( e ) The communistic movement 
was also an important factor in weakening and dissipating the 
strength of the various labor organizations. 

LABOR AND HUMANITARIANISM 

During the unique and “yeasty” period from 1820 to the panic 
of 1857, in which factories and industrial cities were developing and 
the canal and the railway were becoming valued transportation 
agents, the labor movement was only one of several movements 
and agitations. During this period the theory of protection was 
given practical application in several tariffs, particularly those of 
1828 and 1832, but the movement toward high tariffs was checked 
temporarily by the rising tide of free trade, of which the tariff of 
1846 was a result; the stream of immigration broadened; the 
suffrage was extended; imprisonment for debt was practically 
abolished; and various humanitarian movements of a permanent 
or an ephemeral nature appeared, ranging from Communism to 
free tax-supported schools, and from religious revivals and tem¬ 
perance movements to the abolition movement and agitation for 
prison betterment. In this era the West, the workingmen, the 
cities, and the manufacturing interests first became important fac¬ 
tors in defining the political and economic progress of the nation. 

A progressive age, an epoch in which the new is grappling in a 
death struggle with the old, is ever prolific of peculiar and fantastic 
movements, creeds, and parties, which soon die out, but which 
usually leave some lasting imprint upon the dominant characteris¬ 
tics of the time. These movements spring up and run their short 
course alongside of the great and permanent advance movements 
of the age. This period of thirty or forty years is characterized 
by wide-spread agitation for social betterment. Among the signifi¬ 
cant forces which were at the fountain-head of the labor and other 
movements were the panics of 1819 and 1837, the gradual intro¬ 
duction of labor-saving devices, the extension of the market area, 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 57 

and the inherited belief in the equality of men and in the right of all 
to liberty and the pursuit of happiness. 

Like the labor movement of this era, the various concomitant 
humanitarian agitations may be separated into two groups. In the 
decade and a half from 1825 to 1840 occur agitations for educational 
advance, prison reform, abolition of imprisonment for debt, tem¬ 
perance crusades, organization of charitable societies, and the 
communistic movement led by Robert Owen. This period was 
preeminently a practical one; the decade of the forties was, on the 
other hand, in the main idealistic. This characterization fits the 
labor movements as well as the humanitarian movements of the 
period. The decade of the forties has been called the “hot air” 
period and an era of “unbounded loquacity”; it is associated with 
Fourierism, transcendentalism, abolitionism, and the Brook Farm 
experiment. The labor movement of the era preceding the Civil 
War was not an isolated phenomenon; it was very closely related 
to other agitations. The working people were also important 
factors in establishing our free school system, in abolishing the 
practice of imprisoning debtors, and in urging land reform. 

Men are prone to overestimate the economic and social evils of 
the present and to underestimate those of eras which lie behind the 
civilization of today. We of the present are more or less familiar 
with the vast amount of suffering and criminality which followed 
the severe crises of 1873, 1893, 1907-1908, 1921, and 1929-1932; 
but the relative amount of hardship suffered as the inevitable 
consequence of those of 1819 and 1837 is scarcely less. During 
the period of depression from 1819 to 1822, in different cities 
public-spirited citizens served on committees to relieve distress, 
soup houses were opened, and an attempt was made to discover 
the causes of pauperism. The old superficial explanation that in¬ 
temperance was the source of the evils was quite readily and 
generally accepted. Professor McMaster summarizes the situation 
as viewed by the investigators: “A careful examination of the 
reports on the condition of the poor for the years past (1808-1817) 
revealed the alarming fact that paupers were increasing more 
rapidly than population. Fifteen thousand, or one-seventh of the 
population of the city, were actually living on charity. About one- 
sixteenth of them were worthy persons reduced to poverty by the 
depressed state of commerce. Another sixteenth were paupers from 


58 


LABOR PROBLEMS 


a variety of causes. But seven-eighths were people reduced to 
poverty by the inordinate use of liquor.” Niles' Register is the 
authority for a statement that in the county of Chester, located in 
a rich and populous section of Pennsylvania, the number of paupers 
increased from one in every 345 inhabitants in 1810 to one in every 
138 in 1820. In Philadelphia in 1820 the ratio between paupers 
and the total population was estimated at slightly more than one 
to fifty. In the early twenties the increase of juvenile crime and 
in the number of child vagrants attracted much attention, and was 
a factor in causing the demand for free schools. 

A New York City paper published in 1835 declared that 6,069 
criminals and vagrants were committed to the local jails in 1833. 
The number of public paupers for the same year was 24,326. About 
one-eighth of the total population was included in the three classes. 
The amount raised by taxation for the purpose of maintaining this 
publicly supported army was estimated to be about $300,000. 

The winter of 1838 was an unusually severe one; and the effects 
of the panic were such as to cause much unemployment. “ There 
never had been such a time of suffering in New York before, and 
there has not been since.” 1 Horace Greeley was a faithful worker 
on a citizens’ committee appointed to relieve the suffering of the 
poor during that awful winter. His experience in this connection 
produced the frame of mind which led to his adoption of the 
principles of the utopian French Socialist, Fourier. In 1844 Parke 
Godwin, a Fourierite Socialist, painted a pen picture of the contrast 
between the luxurious rich and the wretched poor of the cities, 
which greatly resembles the contrast between the Fifth Avenue of 
today and the slums of any great city. The presence of vast quan¬ 
tities of unworked, but fertile, land did not insure a decent living 
for all. The working people drawn into the cities and the factory 
towns saw and felt the pinch of poverty. Contrasts and evils 
loomed before them; and with the child-like faith of utopia 
builders they looked impatiently for a panacea for the ills which 
afflicted them. 

Imprisonment for debt was a practice which fell with peculiar 
severity upon those who were close to the poverty line, that is, 
upon the wage earners. In 1830 the estimated number of in¬ 
dividuals imprisoned for debt was, in Massachusetts, 3,000; in 
1 Written in 1872. 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 59 

New York, 10,000; in Pennsylvania, 7,000; and in Maryland, 
3,000. At that time the practice had been abolished in two states, 
Ohio and Kentucky. Persons were imprisoned for small as well as 
for large debts; for debts which the debtor was unable to pay as 
well as for debts contracted for the purpose of defrauding the 
creditor. In one city forty cases were recorded in which the sum 
total of the debts was only $23.40^, an average of less than sixty 
cents each. In some states the debtor was not only denied the right 
to an opportunity to earn wages in order to pay his debts, but he 
was obliged, if he was an honest debtor, to depend upon charity 
for the necessities of life — food, clothing, and fuel. Local humane 
societies often kept debtors from freezing or starving. A criminal 
was given greater consideration in regard to food and fuel than was 
accorded the imprisoned debtor. Nearly all the resolutions adopted 
by the numerous mass meetings of workingmen held in the latter 
part of the decade of the twenties and the first half of the thirties 
contain clauses demanding the abolition of imprisonment for debt. 
The labor journals of that period were uniformly opposed to the 
practice. The ephemeral labor parties made abolition of imprison¬ 
ment for debt a plank in their platform. Tammany became in¬ 
terested in this reform as soon as it saw the necessity of getting 
the labor vote. In 1831 an act was passed in New York, abolishing 
imprisonment for debt except in cases of fraud. In other Northern 
states the workingmen carried on an active agitation in regard to 
this matter. By 1840 imprisonment for debt had been abolished 
in practically every Northern state. This reform was accomplished 
by means of the steady, effective pressure of the newly enfranchised 
and rapidly growing laboring class, aided and led by the human¬ 
itarian element. As has been stated, the mechanics’ lien law, which 
made the wage earner a preferred creditor of his employer, was 
pushed through the New York legislature in order to gain the vote 
of the workingmen. This legislation soon spread to other states. 

THE FREE SCHOOL SYSTEM AND THE WAGE EARNERS 

The first great panacea of the organized wage earners was free 
and equal education. For years influential and learned men had 
been preaching the doctrine that the uneducated must ever remain 
in a degraded caste. “ Equality among men results only from 


6o 


LABOR PROBLEMS 


education”; “the educated man is a good citizen, the uneducated 
an undesirable member of the body politic.” These were the oft- 
repeated phrases which came from many sources to the anxious 
wage earners. Suddenly the disturbed mass of toiling humanity 
was touched by the monotonous repetition. Free, equal, practical, 
republican education became the shibboleth of the workers. One 
of the radical resolutions upon this topic was adopted at a meeting 
of workingmen held in New York City in November, 1829: “Re¬ 
solved, that the most grievous species of inequality is that produced 
by inequality in education, and that a national system of education 
and guardianship which shall furnish to all children of the land, 
equal food, clothing, and instruction at the public expense is the 
only effectual remedy for this and for almost every species of in¬ 
justice. Resolved, that all other modes of reform are, compared 
to this particular, inefficient or trifling.” Practically every work¬ 
ingmen’s meeting, from Albany and Boston on the north to Wil¬ 
mington and Charleston on the south, took up the cry. Speeches, 
editorials, and resolutions galore, and planks in local workingmen’s 
party platforms, are recorded of the period from 1828 to about 1833. 
Horace Mann, Henry Barnard, James G. Carter, Robert Dale 
Owen, George H. Evans, and others directed the movement; but 
the potent push came from the firm demand of an aroused and 
insistent wage-earning class armed with the ballot. The rural 
districts, employers, and men of wealth were rarely favorable to 
the tax-supported school; and often their voices were raised against 
it in bitter protest or stinging invective. A careful study of the 
development of the public school system in different states —- 
Massachusetts, Connecticut, Vermont, Rhode Island, New York, 
Pennsylvania, Delaware, Ohio — and the utter lack of a free school 
system in the slave-holding South, confirm these general state¬ 
ments. The wage earners were touched with the enthusiasm of a 
utopian dreamer. Given free and universal education and, they 
firmly believed, all social ills would vanish as the mists before the 
morning sun. A mistaken idea it has proved to be; but it was, 
nevertheless, potent and compelling in that formative period of our 
industrial history. 

The direct influence of the wage earners in the establishment of 
free schools is perhaps most clearly shown in Rhode Island and 
New York. In that small and unique New England state, Rhode 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 61 


Island, before 1820, it was held that to compel a citizen to educate 
his children would be an invasion of his sacred rights as a citizen 
of the commonwealth. The sentiment of the influential class was 
distinctly adverse to a tax-supported school system. Rhode Island 
was suddenly transformed from an agricultural and commercial to 
a predominantly manufacturing state. A bitter, but successful, 
struggle for the extension of the suffrage followed; and within a 
decade after its conclusion the free tax-supported school became a 
generally accepted institution. The workingman’s ballot was in no 
small measure responsible for this sudden and complete reversal 
of policy. In New York, after a year’s experience with a school 
system entirely supported by taxation, the legislature, in response to 
the demands of the opponents of the system, submitted the question 
of a repeal of the law to the voters of the state. Only seventeen 
out of a total of fifty-nine counties voted against the repeal of the 
law and for the free school system; but the majority in these 
counties was so large that the repeal was defeated. In the seven¬ 
teen counties were located the more important cities of the state — 
including New York, Brooklyn, Albany, Buffalo, Schenectady, and 
Syracuse. The voice of the cities and of the workingmen was un¬ 
mistakably in favor of the tax-supported school system. 

LAND REFORM AND THE WAGE EARNERS 

After the panic of 1837 the discontented and suffering workers 
pushed another panacea into the foreground. Free homesteads 
for actual settlers became a slogan. If each head of a family is 
given the right to acquire a quarter section of virgin soil, all will 
be well, it was confidently asserted. Again, the wage earners play 
no small part in giving the nation another important piece of 
legislation — the Homestead Act. Land reformers — humanitari¬ 
ans — blazed the way toward this act; but the workingmen of the 
cities early looked with favor upon free land for homesteads. The 
Working Man’s Advocate gives an account of a meeting ,held in 
New York City in January, 1845. One of the resolutions adopted 
declared “that in our opinion the best method of putting an end to 
Feudalism and Land Monopoly in this State would be for the 
Legislature to pass a general law limiting the quantity of land” 
which one person could own. The land reformer of this period was 


6 2 


LABOR PROBLEMS 


not interested in unionism; he looked upon free land as a means of 
escape from inequitable conditions in the Eastern states. As long 
as the discontented leaders of labor organizations were drawn 
westward by the bait of farms for all, no permanent or potent 
labor organization could arise among the American wage workers. 
Greeley pointed out two ways in which the city laborer would 
benefit: {a) Some competitors would be drawn to new lands, thus 
tending to raise wages, or at least to prevent lowering the rate of 
wages. ( b ) There would be an increasing demand for the products 
of manufactories and workshops, thus increasing the demand for 
labor. 

Employers of labor were favorably impressed by the latter effect, 
but unfavorably by the former. Their attitude would largely be 
determined by the relative importance of the two. After the potato 
famine in Ireland and the revolutionary disturbances of 1848, the 
rapid influx of immigrants afforded a supply of labor which would 
not be seriously drained by free homesteads. The gradual develop¬ 
ment of the factory system and the expansion of the railway net¬ 
work showed the need of wide markets on the one hand, and the 
possibility of economically reaching distant markets on the other. 
To carve farms out of the virgin Western wilderness meant the 
creation of a demand for the products of factory and mine. This 
shifting of the economic center of gravity caused many of the 
manufacturers and employers of labor to align themselves with the 
land reformers and the workingmen in demanding the rapid ex¬ 
tension of the small farm system with individual ownership. The 
South with its plantation system and its slave economy stood as a 
mighty obstacle. The platform of the Republican party in i860 
contained a plank in favor of “the free homestead policy”; and 
when the Southern Senators and Representatives left the halls of 
Congress at the opening of the Civil War, the famous Homestead 
Act became a law. 

“The Republican party . . . was a homestead party. On this 
point its position was identical with that of the workingmen.” 1 
A study of the vote in the first election in which the Republican 
party was a factor shows clearly that it flourished in sections where 
industrial progress was considerable. Practically all the counties 
on the line of the Erie Canal and the southern shore of Lake Erie 
1 Commons, J. R., Political Science Quarterly , Vol. 24, p. 488. 


EARLY HISTORY OF AMERICAN LABOR MOVEMENT 63 


went Republican in the election of 1856. The important exceptions 
were Erie County, in which Buffalo is located, and three counties in 
Ohio bordering on the lake. Allegheny County, including the city 
of Pittsburgh, was carried by the Republicans. All New England 
went Republican. The Republican party was strong wherever 
the New England man had migrated and along the highways of 
commerce and communication between the upper Mississippi val¬ 
ley and the Atlantic seaboard. 

REFERENCES 

Carlton, F. T., “Economic Influences upon Educational Progress in 
the United States, 1820-1850,” Bulletin of the University of Wis¬ 
consin, No. 221 (1908) 

-, “The Workingmen’s Party of New York City,” Political Science 

Quarterly, Vol. 22, pp. 401-415 

-, “An American Utopia,” Quarterly Journal of Economics, Vol. 24, 

pp. 428-433 

-, “ Humanitarianism, Past and Present,” International Journal of 

Ethics, Vol. 17, pp. 48-55 

-, “Abolition of Imprisonment for Debt,” Yale Review, Vol. 17, 

pp. 339-444 

Commons, J. R., Documentary History of American Industrial Society, 
Vols. 5, 6, 7, and 8 

-, History of Labor in the United States, Vol. 1 

-, “The American Shoemakers,” Quarterly Journal of Economics, 

Vol. 24, pp. 39-84 

-, “ Horace Greeley and the Working Class Origin of the Republican 

Party,” Political Science Quarterly, Vol. 24, pp. 468-480 
McMaster, J. B., A History of the People of the United States, Vol. 4, 
Chap. 37, and Vol. 5, Chap. 49 

Perlman, S., A History of Trade Unionism in the United States, Chap. 1 

Stone, G., History of Labor 

Ware, N. J., The Industrial Worker, 1840-1860 


CHAPTER IV 


THE CIVIL WAR PERIOD AND AFTER 

INDUSTRIAL PROGRESS DURING THE WAR 

The period of the Civil War is unique in American industrial 
history. It may not inaccurately be termed the epoch of the 
second American industrial revolution. The period marks as 
significant a change in our industrial and social history as in our 
political history. The war caused an unprecedented drain of work¬ 
ers from the productive industries into the army; thousands of 
workers left the plow and the bench to take up the musket. The 
demand for goods was deranged as a consequence of hostilities; 
an abnormal demand arose for army supplies and the munitions 
of war. The war tariffs and internal revenue acts were also dis¬ 
turbing factors. Soon after the opening of the contest large issues 
of paper money were made; and, as a consequence, prices rose 
rapidly and were subject to great fluctuations. The diminution 
in the supply of adult male labor caused an increased resort to 
child, woman, immigrant, and convict labor, and led to the rapid 
introduction of labor-saving machinery. While the tendency 
toward concentration of industry and wealth began to be apparent 
during the decade preceding the war, the abnormal conditions 
existing during the conflict greatly accelerated the movement. 
A few labor organizations trace their history back to the decade 
of the fifties; but the Civil War is responsible for the industrial 
changes which have made labor organizations permanent factors 
in our industrial life. The growth of the railway network rapidly 
enlarged the market area, and brought the middle West into direct 
communication and competition with the seaboard. In short, 
this abnormal epoch gave an extraordinary impetus toward inven¬ 
tion, large-scale industry, and the formation of labor organizations. 
“The Civil War made iron the king of the American industrial 
world.” 

The historian can discern that the decade of the fifties foretold 

64 


THE CIVIL WAR PERIOD AND AFTER 65 

the downfall of the small-scale industries and the advent of indus¬ 
trial combinations and of the large corporations; but contempo¬ 
rary students saw only the slavery agitation and the events which 
were hurrying the nation into civil strife. The discovery of gold 
in California in 1848 quickened the pulse of industry. The migra¬ 
tion of people to the far West began; and the population of Cali¬ 
fornia increased fourfold in the decade of the fifties. The iron and 
copper mines of the Lake Superior regions commenced to send 
shipments to the lake ports; and the iron industry of northeastern 
Ohio began to give promise of its future magnitude. The year 
1859 marked the beginning of the phenomenal growth of the oil 
industry. Many notable inventions were patented in the years 
immediately preceding the Civil War, among them the sewing 
machine, the telegraph, boot and shoe machinery, and the reaper. 
The wheat and corn production of the middle West was increasing 
by leaps and bounds. Exports and imports doubled in the decade 
of the fifties. In 1850 our imports of merchandise were valued at 
$173,500,000; in i860, at $353,600,000. 

“Life at the North during the war,” writes the historian Rhodes, 
“resembled that of most civilized communities which had full 
communication with the outside world. Business went on, schools 
and colleges were full, churches were attended, and men and women 
had their recreations.” With the exception of the first year, the 
Civil War period was one of prosperity in manufacture, transporta¬ 
tion, mining, and agriculture. Profits were large; and the issuance 
of enormous amounts of paper money inflated prices and caused 
much speculation. The war produced an abnormal demand for 
standardized articles; and such a demand makes large-scale industry 
particularly advantageous. The woolen industry experienced a 
phenomenal growth. The supply of cotton was cut off; and the 
government purchased large supplies of army clothing. New 
woolen factories were opened; many were operated both day and 
night. Dividends of ten to twenty per cent were common; and 
larger returns were not unknown. Not satisfied with unusual 
profits honestly made, manufacturers resorted to the production 
of “shoddy” goods. The use of the sewing machine allowed the 
manufacture of clothing to expand rapidly. “The shoe industry 
likewise benefited by the sewing machine, in fact was converted 
from a system of household manufacture to the modern factory 


66 


LABOR PROBLEMS 


system.” 1 The rise of the iron industry was even more remarkable. 
The number of establishments for the manufacture of iron doubled 
in the decade of the sixties, the amount of capital invested multi¬ 
plied nearly six times, and the value of the product likewise in¬ 
creased nearly six-fold. The American Iron and Steel Association 
was formed; and the iron manufacturers became a powerful 
obstacle on the path of the movement for tariff reduction after 
the war was ended. Pittsburgh was already the great center of the 
iron and steel business. While the soldiers of the North and the 
South were fighting on many a battle field, railways were uniting, 
capitalists were combining to control coal mines and timber lands, 
and oil refineries and salt mines were being gathered under the 
control of a few companies. Price agreements, business combina¬ 
tions, and associations of business men were in fashion. 

LABOR DURING THE CIVIL WAR PERIOD 

The rapidity with which prices rose in the sixties was even 
more marked than in the thirties. In the earlier period, as was 
indicated in a previous chapter, an extraordinary outburst of trade- 
union activity was induced; and the rapidly rising prices of the 
sixties had the same effect. After 1862 labor agitation became 
considerable; concerted effort was necessary in order to force 
increases in wages commensurate with the rise in prices. In the 
period of the sixties, however, the supply of labor was reduced 
until the close of the war, then it was suddenly expanded. In the 
thirties, few labor-saving devices came into use. In the sixties, 
labor-saving devices multiplied rapidly; and the employing classes 
were more strongly united than in the earlier period. On the 
other hand, the wage earner might become a soldier or move to 
the farming or the mining districts of the West or of the middle 
West. Thus the growth of organization among the wage earners 
met certain obstacles which were not important in the thirties. 

The decade of the fifties witnessed the organization of several 
national trade unions and of an indefinite number of local unions. 
For example, the cigar makers of Cincinnati are reported to have 
organized a local in 1843; another was formed in Baltimore in 
1851. In succeeding years, additional locals were formed in New 

1 Fite, E. D., Social and Industrial Conditions during the Civil War , p. 90. 


THE CIVIL WAR PERIOD AND AFTER 


67 


York and other cities. In 1851 a national union of printers was 
organized. None had existed since the ephemeral national organiza¬ 
tion of the thirties disappeared amid the chaos of the panic of 1837. 
The National Trade Association of Hat Finishers was organized in 
1854. The iron molders and the machinists and blacksmiths 
formed national unions in 1859; and the ship carpenters and the 
coal miners in 1861. The period of the fifties had been marked 
by little labor legislation except of the humanitarian type. 

With the issuance of paper money the workingman awoke to 
find himself menaced by rising prices and opposed by an alert, 
capable, and strong employing class. From 1863 to 1865 the 
working people organized and carried on strikes in much the same 
manner as from 1834 to 1837. A newspaper dated March 26, 1863, 
stated that many strikes had occurred “ within the last few 
months.” Numerous trade-union organizations were said to have 
been organized. 1 Evidently strikes were again “the fashion” and 
organization and agitation the watchwords of the wage earners. 
Until near the end of the war strikes were usually successful; 
but they were not sufficiently successful to cause the increase in 
wages to keep pace with rising prices. “At one mass meeting in 
New York over fifty different unions, most of which were new, were 
represented, and by a conservative estimate the total number of 
new unions in the city may be placed at three hundred.” 2 New 
national organizations naturally appeared; several were formed 
before the surrender of Lee. Among those organized were the 
Brotherhood of the Footboard, the forerunner of the Brotherhood 
of Locomotive Engineers, the Cigar Makers’ International Union, 
and the Bricklayers and Masons’ International Union. Before 
the close of the year 1865, at least thirty city central unions were 
organized. “Finally, in September, 1864, when the membership 
of the unions was estimated at two hundred thousand, the trades’ 
assemblies endeavored to form a national, or, rather, the Inter¬ 
national, Industrial Assembly of North America. The uppermost 
questions in this first national gathering were strikes, the store- 
order or truck system of paying wages, cooperation, prison labor, 
and woman’s work.” 3 From 1863 to 1866 the insistent demands of 

1 Quoted from Mitchell, W. C., History of the Greenbacks , p. 348, footnote. 

2 Fite, op. cit., p. 205. 3 Commons, J. R., and Andrews, J. B., Documentary 

History of American Industrial Society, Vol. 9, p. 23. 


68 


LABOR PROBLEMS 


organized labor were for higher wages, a shorter working day, and 
the right to organize without interference on the part of their 
employers. The aims of the wage earners at this time were pre¬ 
dominantly practical. 

With the return of the soldiers looking for employment, the zeal 
for unionism increased; but the methods and ideals of labor organ¬ 
izations were gradually modified. In 1866 a National Labor Con¬ 
gress was held in Baltimore. The National Labor Union, the second 
successful attempt to form a national organization of all labor 
unions, seems to have been an outgrowth of the Congress of 1866. 
Annual conventions of the National Labor Union were held in 
1867, 1868, 1869, 1870, 1871, and 1872. The National Labor Union 
was a weak federation of local, state, and national organizations. 
In the first convention at least, delegates were received from 
organizations other than pure and simple trade unions. The con¬ 
stitution of the Union declared that it “shall be composed of such 
labor organizations as may now or hereafter exist, having for their 
object the amelioration of the condition of those who labor for a 
living. . . . Every international or national organization shall be 
entitled to three representatives; state organizations to two; 
trades’ unions and all other (labor) organizations to one representa¬ 
tive in the National Labor Congress.” 1 The officers consisted of 
a president, two vice-presidents, a recording secretary, a treasurer, 
and one corresponding representative in each state. The annual 
dues varied from $1.00 for organizations numbering fifty members 
or less, to $6.00 for all unions having more than five hundred 
members. 

One of the measures favored from the outset was an eight-hour 
day for all wage earners. This demand was taken up by organized 
workers from the Atlantic to the Pacific. In June, 1868, on the 
eve of a presidential election, Congress passed a soon-to-be-emas¬ 
culated eight-hour law applying to all laborers and mechanics 
“employed by or on behalf of the United States government.” 
The National Labor Union loudly proclaimed that it had been a 
potent factor in securing the passage of this act. The prestige thus 
given to it made the 1868 meeting by far the most important of the 
six conventions of this organization. In 1868 William H. Sylvis, 
who was the leader of the iron molders’ union, and one of the 
1 The word “labor” was inserted in 1868. 


THE CIVIL WAR PERIOD AND AFTER 


69 


ablest workingmen of this period, was elected president, but he 
died a few weeks before the next annual meeting. The meeting 
held in 1872 closed the career of this weak advisory national body. 
Only seven delegates attended the last meeting. One well-known 
authority decided that this organization died “from the disease 
known as politics”; 1 but its chief purpose and aim seems to have 
been political rather than economic. It came into being because of 
a desire to influence legislation. 

The important demands and recommendations in the platform 
adopted in 1868 by the National Labor Union were: (1) Since the 
money monopoly was the parent of all monopolies, the national 
banking system should be abolished, and the capital stock of banks 
and government bonds should not be exempted from taxation. 
(2) The establishment of cooperative stores and workshops was 
favored. (3) The organization pledged itself to aid women wage 
earners. (4) The abolition of the contract system of convict labor 
was demanded. (5) The platform asserted that poverty, vice, and 
crime invariably accompanied bad housing conditions, and it asked 
for better dwellings for workers. (6) The establishment of me¬ 
chanics’ institutes, lyceums, and reading rooms for the education 
and enjoyment of the wage earners was recommended. (7) As a 
remedy for unemployment, emigration to Western lands was ad¬ 
vocated. 

Other demands made by organized labor during the latter half 
of the sixties were (1) for an eight-hour day, (2) that no land grants 
be made except to actual settlers, (3) for the establishment of a 
national labor bureau, (4) that the importation of cheap labor be 
restricted, (5) for the reduction or abolition of tariff duties on the 
necessities of life, (6) that only a small standing army be main¬ 
tained, and (7) for the early payment of the national debt. The 
demands of labor at this time were primarily political and required 
the passage of legislation by the national and state governments. 
The demands which could be obtained by purely trade-union 
methods were few. Unionism in the period 1866 to 1870 was 
political rather than business unionism. 

Finally in 1869, at the close of the period under consideration, 
a so-called labor-reform party was organized in Massachusetts. 
In the first year of its existence, the party elected twenty-one 
1 Ely, R. T., The Labor Movement in America , pp. 69-70. 


7o 


LABOR PROBLEMS 


representatives to the State Assembly and one State senator. The 
state ticket polled 13,000 votes, or about one in every ten votes 
cast. 1 At the second convention, held in 1870, Wendell Phillips 
was nominated for governor. The prohibition party also placed 
Mr. Phillips at the head of its ticket. The labor party advocated 
the separation of industrial from political questions. The planks 
in the platform of 1870 were similar to the recommendations of the 
National Labor Union. Two or three new demands were made, 
however, which indicate the appearance of new evils. The regula¬ 
tion of railway rates and the abolition of the importation of laborers, 
particularly from China, under contract, were advocated. In 1871 
the resolutions presented by Phillips and adopted by the labor- 
reform party were tinged with Socialism. It was affirmed that 
labor is the creator of all wealth; the abolition of special privileges 
was demanded; and it was asserted that the capitalistic system 
was making the rich richer and the poor poorer. In 1872 a labor 
congress was held at Cincinnati to organize a national party for the 
election of that year. David Davis was nominated, but he finally 
refused to accept the nomination. No further nominations were 
made. 

During the last years of the period, cooperation vied with po¬ 
litical action as a solution of the difficulties confronting labor 
organizations. William H. Sylvis, as early as 1864, advocated the 
establishment of cooperative foundries. According to this labor 
leader, “cooperation is the only true remedy for low wages, 
strikes, lockouts, and a thousand other impositions and annoy¬ 
ances to which workingmen are subjected.” 2 It is known that a 
number of cooperative foundries were established during the latter 
years of this period. 

The most significant demand made by the wage earners in this 
period was for an eight-hour day. The basic principles of the new 
philosophy of the short working day were formulated by Ira Stew¬ 
ard, a mechanic of Boston. Steward boldly cast the time-honored 
wage-fund doctrine overboard. The short working day, by in¬ 
creasing the amount of the workers’ leisure, would raise the 
standard of living of the workers. As the standard of living rises, 
wages, it was argued, would also rise, and more and more ma- 

* 1 American Workman , November 20, 1869. 

2 Quoted in Ely’s The Labor Movement in America , p. 183. 


THE CIVIL WAR PERIOD AND AFTER 


71 


chinery would be used in production. “To employ muscular 
labor,” wrote Steward, “instead of the great forces of nature, not 
only means poverty, but the physical abuse, deformity, and pre¬ 
mature decay of the laborer. . . . Natural forces never grow tired; 
are always ready when the conditions necessary to employ them 
are ready; and to their power to produce wealth abundantly there 
is no conceivable limit.”) If labor were made expensive by short¬ 
ening the working day and increasing the wants of the wage earner, 
natural forces would multiply indefinitely the total amount of 
production. Wages are thus made indirectly to depend upon the 
standard of living. This optimistic program aimed at the final 
elimination of the capitalist. “For wages will continue to increase 
until the capitalist and laborer are one,” and therefore it follows 
that cooperation will replace the wage system^ But the presence 
of wage earners satisfied with a low standard of living was consid¬ 
ered to be a constant menace to all who clung to a higher standard. 
In the era of wide markets, high standards of living in America 
are menaced by the low standards of the men in China and India. 
“The world-wide power of the lowest over the highest paid labor 
can no longer be disregarded,” declared this spokesman of the wage¬ 
earning class of two generations ago. I “Although Steward failed to 
secure general legislation in all states, the trade unions made his 
doctrine their basic one; and today, among American wage earners, 
whether organized or unorganized, as distinguished from immigrant 
wage earners, Steward’s doctrine is the instinctive philosophy.” 1 

The era of rising prices in the thirties caused a flash of class 
consciousness. Again, from 1862 to 1866, bitter antagonism be¬ 
tween employer and employee was not lacking. On June 30, 1863, 
preceding the battle of Gettysburg by three days, an organization 
of Philadelphia employers decided to run the establishments of 
their members only half-time, paying half-time wages, “in order 
that the men may organize and drill in the afternoon.” This 
patriotic ardor was not displayed until Lee’s army menaced Penn¬ 
sylvania. Fincher’s Trade Review declared that the employers 
“mean to combine for the purpose of forcing their hundreds and 
thousands of employees to defend their (the employers’) property, 

1 Commons, J. R., and Andrews, J. B., Documentary History of American 
Industrial Society, Vol. 9, p. 26. The quotations from the writings of Ira Steward 
are taken from articles reprinted in this volume. 


72 


LABOR PROBLEMS 


at their (the employees’) own expense.” The editor of another 
labor paper antedated by nearly forty years the opening words of 
John Mitchell’s Organized Labor when he stated that the working¬ 
men no longer expect to become capitalists. He declared that an 
exclusive caste based upon wealth was in the process of formation. 
“The hope that the workingman may enter this circle is a glittering 
delusion held up before him to distract his attention from the real 
object of his interest.” 1 William H. Sylvis, in a speech delivered 
in the latter part of the sixties, spoke of “a money aristocracy — 
proud, imperious, and dishonest. . . . This power is blasting and 
blistering everything it comes in contact with.” 2 

The influx of immigrants during the last years of the war and 
the occasional use of Negroes as strike breakers intensified the 
antagonism between the employers and the union men. And the 
coming of the immigrant increased the divisive force of race 
prejudice and antagonism which has retarded the development of 
unionism in this country. It was feared that when the workingmen 
who had enlisted returned they would find their places filled by 
immigrants from foreign lands and by the emancipated slaves. 
As early as 1863 a spokesman of the wage workers demanded 
“proper restriction upon the ingress of emancipated slaves.” Ow¬ 
ing to his low standards of living, it was said that the black man 
could not be a “fair competitor of the white worker.” 3 

In the Civil War period, labor was never strongly organized. 
No clear vision of the solidarity of the laboring classes had as yet 
caught and held the attention of the wage earners. But the Civil 
War made permanent labor organization inevitable. The Civil 
War marks a transition period in our labor history. Concentrated 
capital, the extensive use of subdivided labor, the influx of the 
cheap labor of southern Europe, and the peopling of the West have 
given organized labor its big problems. Henceforward, the United 
States was destined to be “an industrial community which organ¬ 
ized its industries on a large scale.” 

The panic of 1873 checked the growth of unionism temporarily. 
Many unions disbanded. Since the dues paid by the members 
of these early trade unions were low and no adequate system of 

1 The Workingman’s Advocate (Chicago), Sept. 1, 1866. 

2 Sylvis, J. C., The Life, Speeches, Labors, and Essays of William H. Sylvis, 
p. 280. 

3 Fincher’s Trade Review, June 13, 1853. 


THE CIVIL WAR PERIOD AND AFTER 


73 


benefits was provided, many organizations could not stand the 
pressure of hard times. The membership of the International 
Typographical Union, for example, fell from 9,797 in 1873 to 4,260 
in 1878; and the number of locals in the organization decreased 
from 105 to 60. In addition to the orthodox unions which made 
up the bulk of the National Labor Union, many ephemeral labor 
organizations had been formed. These bodies were grand in con¬ 
ception and were secret associations rather than trade unions. 
They were characterized by strange blends of unionism and politics, 
and of individualism and socialism. Their leaders as a rule were 
middle class liberals and reformers. In the seventies and eighties 
of last century, life was much simpler than in the first third of the 
present century. The automobile, the movies, and a multitude of 
other forms of amusement and distraction were of the future. 
A secret organization with ritualistic ceremonies and a private 
meeting place offered a form of adventure which was welcomed 
by many. Of this type of organization two only will be briefly con¬ 
sidered — The Knights of St. Crispin and the Knights of Labor. 

THE KNIGHTS OF ST. CRISPIN 

This organization of shoemakers arose during the period of 
transition of the shoemaking industry from the small-scale or 
handicraft stage to the large-scale or factory stage, and near the 
close of the Civil War period. During the early fifties many in¬ 
ventions were made which “were aids to the journeyman rather 
than substitutes for his skill.” But with the introduction of the 
pegging machine in 1857 and the sole-sewing machine five years 
later, the journeyman shoemaker faced the danger of the loss of 
his trade and the competition of unskilled labor or “green hands.” 
With these machines the shoemaking industry was ripe for the 
factory stage, and the Civil War with its demands for soldiers’ 
shoes caused the evolution to be almost a revolution. By 1870 or 
1875 the factory system was well developed. The Knights of 
St. Crispin were first organized in 1867; the first meeting of the 
Grand Lodge was held in 1868. In form it was a secret organization 
with a ritual. Within five or six years it became the most powerful 
labor organization formed up to that time; and then it quickly 
melted away. “It made and unmade politicians; it established 
a monthly journal; it started cooperative stores; it fought, often 


74 


LABOR PROBLEMS 


successfully, for better returns to its members for labor performed; 
it grew rapidly in numbers, and became international in scope.” 1 
A New York newspaper in 1869 stated that the first lodge of St. 
Crispin in that city was organized in 1868 in an attic room; but 
the union had grown until it was said to include in its membership 
nearly all the skilled shoemakers and to control practically all the 
shops of the city. At the height of its power the order had a mem¬ 
bership of at least 40,000, about four times as many workers as 
any other labor organization then in existence. The order practi¬ 
cally disappeared soon after the panic of 1873. 

The shoemakers were confronted by two dangers. Either one 
of the two alone would have been sufficient to call forth organized 
protests; the two united forced craftsmen with an almost un¬ 
paralleled spontaneity into a powerful labor organization. In the 
first place, the effect of rising prices directly pinched the shoemaker 
as it did other workers; and, secondly, the employers in the fac¬ 
tories were substituting green hands — cheap labor — for the 
skilled journeymen. As a consequence unemployment increased and 
the employers were actively trying to reduce wages. The St. Cris¬ 
pins were primarily organized as a national body, not so much 
to protest against the use of the machine as against the introduction 
of cheap labor which seemed to the journeymen to be the abuse 
of the machine. They attempted to establish a monopoly in the 
shoemaking industry by refusing to teach apprentices and green 
hands. One of their important rules read: “No member of the 
order shall teach or aid in teaching any part or parts of boot or 
shoe making unless the lodge shall give permission.” The St. 
Crispins utilized the strike, but they considered cooperation to be 
an efficient remedy “for many of the evils of the present iniquitous 
system of wages.” “The Knights of St. Crispin was the first great 
protest of America’s workmen against the abuse of the machine. 
Fantastic in some of its superficial features, crude in its methods, 
and loose in its organization, it yet embodied an essential demand 
for justice. The shoemakers insisted, and rightly, that the benefits 
of machinery should be to those who toil with it as well as to those 
who own it or buy its products.” 2 

1 McNeill, G. E., The Labor Movement , p. 200. 

2 Lescohier, D. D., Bulletin of the University of Wisconsin, No. 355, p. 59. 
See also Commons, J. R., Quarterly Journal of Economics , Vol. 24, pp. 72-75. 


THE CIVIL WAR PERIOD AND AFTER 


75 


Such a powerful labor movement could not fail to develop oppos¬ 
ing associations of employers and dealers. One of these, a Shoe and 
Leather Association, protested against the methods of labor organ¬ 
izations. Using words similar to those employed by employers’ 
associations of today, this body declared that “nothing will im¬ 
prove the condition of journeymen but mental and moral culture.” 
A vigorous protest was made against what is now called the closed 
shop policy. This policy was held to be a violation of the rights of 
both employer and employee. Wages should be determined by the 
familiar law of demand and supply without interference on the 
part of organized labor. 1 

THE KNIGHTS OF LABOR 

The Noble Order of the Knights of Labor was organized by 
U. S. Stevens, a tailor of Philadelphia, on Thanksgiving Day of 
1869. It was at first a secret organization. Even its name was 
kept secret, and the order had a somewhat elaborate ritual. 
Later the element of secrecy was eliminated. The first local as¬ 
sembly of the Knights was composed solely of garment workers. 
The original intention seems to have been the formation of a 
trade union to advance the interests of the garment workers. 
Within a year, however, a man who was not a garment worker 
was initiated. The ideal of trade unionism was replaced by the 
hope of successfully amalgamating all workers into one coherent 
and centrally managed body. The first general assembly of the 
order was held in 1878, at which time the membership was reported 
to be 80,000. The membership increased gradually until 1885, 
at which time it numbered over 100,000; then suddenly the order 
grew in strength until in 1886 about 700,000 members acknowl¬ 
edged the supremacy of the general assembly. This was the high- 
water mark in the history of the order. Mr. T. V. Powderly, the 
grand master workman, said: “The officers were taken up in 
the vain attempt to assimilate and educate the incoming tide of 
humanity which looked to the organization for relief, rather than 
to their own efforts in the organization in the behalf of all.” The 
symptoms of over-organization appeared; many strikes occurred; 
political entanglements followed; cooperative experiments were 
costly; difficulties with trade unions became serious; and frequent 
1 The American Workman, Aug. 13, 1870. 


76 


LABOR PROBLEMS 


internal dissensions arose. The tide set definitely toward the 
formation of national trade unions and the membership of the 
Knights decreased. Federation rather than amalgamation became 
the accepted method of unification among labor organizations. 
The Knights of Labor lived for many years as an impotent organiza¬ 
tion. 

The government of the Knights of Labor was in theory highly 
centralized. The executive officers and the annual General As¬ 
sembly were given much power over the subordinate bodies—- 
national, trade, state, district, and local assemblies. These local 
assemblies were usually composed of men of one trade but some 
locals were mixed assemblies composed of men of various trades. 
The latter sought “to gather into one association all branches of 
honorable toil, without regard to nationality, sex, creed, or color.” 
Men of nearly all classes were admitted. “At the option of each 
local assembly any person over the age of sixteen years is eligible 
to become a member of the order, except employers in the manu¬ 
facture or sale of intoxicating liquors, and no banker, professional 
gambler, or lawyer can be admitted.” Many farmers were members 
in the years of its greatest strength. A local might be directly at¬ 
tached to the general assembly; but it was usually subordinate to a 
district, a state, or a national trade assembly. A district assembly 
was composed of representatives of the local in a given locality. 
It might include only workers in one trade or it might be a “mixed 
assembly.” “A state assembly, when formed, has jurisdiction 
over all the territory of its State which is not assigned to mixed 
district assemblies already existing, together with such territory 
as may be surrendered by any such district assembly.” 1 The na¬ 
tional trade assemblies were, as the name indicates, made up of rep¬ 
resentatives from the locals composed of workers in one trade. 

The Knights of Labor proposed to improve the conditions of 
the laboring class as a whole, not merely to better the conditions 
of a fraction of the mass, that is, of one trade. “An injury to one 
is the concern of all,” was a favorite motto. Solidarity was a 
“major idea or sentiment” of the organization. The ultimate aim 
of the leaders of this organization in the early part of its career 
was some form of a cooperative commonwealth. In the days of 
its prosperity it had a fine conception of the solidarity of the work- 
1 Report of the Industrial Commission , Vol. 17, p. 17. 


THE CIVIL WAR PERIOD AND AFTER 


77 


ing class; but the time had not yet arrived when an organization 
which aimed at the amalgamation of all workers could be effectively 
maintained. 

The declaration of principles adopted by the first general as¬ 
sembly indicates that the Knights of Labor expected the better¬ 
ment of the working class to come through political action or 
cooperation rather than through strikes, boycott, and the other 
customary methods of trade unions. Among the reforms demanded 
by the first general assembly were the referendum, the establish¬ 
ment of a bureau of labor statistics, that occupancy and use should 
furnish the only valid title to land, the prohibition of child labor, 
the levying of graduated income and inheritance taxes, the estab¬ 
lishment of a postal savings bank system, government ownership 
of the railways and of the telegraph lines, the introduction of 
the system of cooperation to supersede the wage system, the use 
of arbitration in labor disputes, and the gradual introduction of 
the eight-hour day. One of their aims was “to make industrial 
and moral worth, not wealth, the true standard of individual and 
national greatness.” This peculiar hotch-potch of idealism, politi¬ 
cal reform, and quasi-socialism could not form a firm basis upon 
which to erect permanent union of men from many trades. Too 
many of these demands did not relate definitely and specifically 
to the immediate interests of the wage earners. The rank and file 
of the members could not be expected “to discuss patiently, adopt 
calmly, and execute bravely, plans for the amelioration” of all 
wage earners, skilled and unskilled, black and white. Consequently, 
the Knights of Labor gave way to another organization whose eyes 
were fixed on more immediate goals, whose ideal of government 
was confederation rather than centralization, and which emphasized 
the division of workers along craft lines instead of attempting to 
unite all workers and friends of the working class into one mass 
organization. 

REFERENCES 

Carlton, F. T., “Ephemeral Labor Movements, 1866-1889,” Popular 
Science Monthly, Nov., 1914 

Commons, J. R., History of Labor in the United States , Vol. 2, Part 5 

-, and Andrews, J. B., Documentary History of American Industrial 

Society, Vols. 9 and 10 

Ely, R. T., The Labor Movement in America, Chap. 3 


78 


LABOR PROBLEMS 


Fite, E. D., Social and Industrial Conditions during the Civil War 
Lescohier, D. D., “The Knights of St. Crispin/’ Bulletin of the Uni¬ 
versity of Wisconsin, No. 355 
McNeill, G. E., The Labor Movement 

Mitchell, W. C., A History of the Greenbacks, Part 2, Chaps. 4 and 5 
Powderly, T. V., Thirty Years of Labor 

Rhodes, J. F., History of the United States from the Compromise of 1850, 

Vol. 5 

Ware, N. J., The Labor Movement in the United States, i86o-i8gy 


CHAPTER V 


THE LABOR ORGANIZATION 

WHAT IS A LABOR ORGANIZATION? 

“A continuous association of wage earners for the purpose of 
maintaining or improving the conditions of employment” is one 
definition of a labor organization. Slaves, serfs, men working for 
themselves, and employers cannot form labor organizations. The 
forms, ideals, and methods of organized labor change with modifi¬ 
cations in industrial methods and equipment, and also vary in 
different occupations, industries, and environments. Remembering 
the variability and mutability of unionism, a search may be made 
for the essential institutions or social forces which have welded 
wage earners into the stable and aggressive unions of today. Re¬ 
duced to the simplest terms, these are two in number: (i) the 
separation of the workers from the means of production, and (2) the 
extraordinary increase in the powers of production due to the use 
of natural forces and machinery. 

As long as the workers owned the tools with which they worked, 
or owned both the tools and the products of their labor, the worker 
was not a wage earner. Before the modern trade union could arise 
the cleavage between employer and employee, between capitalist 
and wage earner, must become quite distinct. The rise of unionism 
is coincident with a horizontal cleavage within what had been one 
industrial class. With the growth of the factory system the cost 
of the tools and machinery and of the workshop increased; and, 
consequently, the line of demarcation between employer and em¬ 
ployed grew more distinct. Unions appeared before the factory 
became an important industrial factor; but the factory is primarily 
responsible for the widespread and coherent form of modern labor 
organizations. The increasing use of machinery and of natural 
forces in manufacturing and in transportation multiplied the 
amount of capital necessary to carry on an industrial enterprise 
efficiently. This circumstance still further widened the breach 

79 


8o 


LABOR PROBLEMS 


between the employer and his employee, and reduced the capillarity 
of the wage-earning class. Meanwhile the limits of the market 
area were being rapidly pushed further and further, and people 
were becoming interdependent. Unionism, at first purely local and 
intra-trade, has become national and international and inter-trade. 
But the central strand in this intricate web of cause and effect is 
the transformation of the worker into a mere purveyor of labor 
power. 


THE PURPOSE OF LABOR ORGANIZATIONS 

Preceding the nineteenth century and the use of natural power 
and machinery, leisure and comfort, were considered to be the 
birthright of only a few. Hard and almost continuous toil on the 
part of the multitude was necessary to eke out an existence. With 
the enormous increase in the productive capacity of the world has 
come the possibility of a shorter working day and of a rising 
standard of living for the mass of toilers. Unionism has for its 
primary purpose higher wages, a shorter working day or week, 
and better working conditions; it is a means to an end. Gains in 
these three directions have been possible because of the technologi¬ 
cal advances achieved in recent decades. The early labor organiza¬ 
tions were exclusive and monopolistic; they aimed to improve the 
status of a group of workers in a given trade. Little or no attention 
was paid to toilers in other crafts or occupations. Up to the present 
time indeed the tendency toward more inclusive organization in 
order to secure for wage workers as a class a portion of the benefits 
of industrial progress, is not well defined. Indeed, a widespread 
and inclusive labor organization could not long survive until the 
painful era of scarcity was succeeded by one in which a sufficiency 
is possible for all. The spectacular rise and fall of the Knights of 
Labor in the eighties indicate that the solidarity of labor was then 
an insufficient foundation for a labor organization. Such organiza¬ 
tions do not become important and permanent factors in the com¬ 
munity until the problems centering around the distribution of 
wealth rival in interest those connected with production. In a 
democracy labor organizations may utilize two major forms of 
activity in order to accomplish their purposes — economic and 
political. Up to the present time the chief reliance of American 
unionists has been placed upon economic activities. 


THE LABOR ORGANIZATION 


81 


The labor organization grows out of unrest and group conflict. 
The workers with slavery and serfdom as a background are strug¬ 
gling upward in the social and economic scale. Along with ad¬ 
vantages which have come to the worker as a result of science and 
technology have also come the great disadvantages and dangers 
of economic insecurity. Every invention, every new process, and 
every new fashion modify conditions and make for uncertainty. 
The worker of today, facing insecurity and the disadvantageous 
position assigned to him by the traditions rising out of the past, 
almost instinctively turns toward some form of organization, 
(i) Unrest, prodding workers into unionism, may come out of 
economic conditions, and be concerned chiefly with wages, hours of 
labor, unemployment, and working conditions. (2) It may develop 
because of bargaining about wages and working conditions, or 
because of opposition on the part of employers and employers’ 
associations. (3) Unrest may grow out of governmental policies 
as exhibited in legislative acts, court decisions, and injunctions. 
(4) It may be generated as the result of elimination of craftsman¬ 
ship or certain modifications in workers’ “rights” in consequence 
of industrial progress. Workers hope to obtain greater security 
and an improvement of status through labor organizations. Be¬ 
cause unionism has confronted fierce opposition, the psychology 
of the orthodox labor organization has been that of conflict or of 
an armed truce. 

The propertyless individual has little bargaining power. Laissez 
faire-ism, or individualism, means defeat for the weaker members 
of a competitive society. Workingmen unite into a group for the 
purpose of gaining the advantages due to collective or cooperative 
action. It seems clear that the great majority of men today can 
accomplish little by struggling single-handed and alone; coopera¬ 
tion, teamwork, and united effort are the slogans of groups which 
are pushing upward toward a higher economic and social status. 
A labor organization is trying to get away from precedent and the 
traditions of the past; it endeavors to make the days to be better 
than the days which are passed. “Membership in a union means 
for the individual discipline, a surrender of self-interest, conformity 
to the standards of his fellows”; 1 but it also leads to more con¬ 
siderate treatment by hard-boiled foremen and arrogant executives. 

1 Furniss, E. S., Labor Problems , p. 226. 


82 


LABOR PROBLEMS 


Unionism, or any other important form of organization, takes from 
the individual member more or less of his freedom of action; but 
he receives greater income, is treated more considerately, or gains 
in self-respect, as a result of being one of a group. The preferences 
and idiosyncrasies of the individual are modified by being pressed 
into a group mold. Especially in times of stress, the loyal member 
of the union will be ready to bow to the will of the group, as formu¬ 
lated in its rules and regulations, and by its leaders. The union 
aims to take from the employer his “monopoly on authority’’ 
in industry; it wishes to take from the employer the right of 
arbitrary discharge, and the complete control over many other 
incidents of employment. 

In past decades the union has been in some degree a working¬ 
men’s club. In the meeting places members came into contact 
with each other in a friendly way, news of the craft was obtained, 
and many other social attractions were found. Today, the auto¬ 
mobile, the movie, the radio, and a multitude of other commercial¬ 
ized amusement opportunities present so many counter attractions 
that the union as a club for workingmen has lost much of its 
drawing power. 

Passing by the broad aspects of unionism, such as are presented 
by capable and far-seeing labor leaders, or are often analyzed by 
academic students of industrial relations, it may be informative 
to ask about the motives which led individuals in the ranks of 
organized labor to become unionists. These reasons are specific 
and devoid as a rule of glittering generalities. One joined the 
union because in this way he hoped to receive higher wages; a 
second joined in order to keep his job, or to get one, in a union 
shop; a third stressed better working conditions and more regu¬ 
larity of work; another joined because his friends were members 
and he hoped to have a good time at meetings; another had an 
ambition to become an official in a union; a radical worker joined 
to help bring about the social revolution; and another became a 
member in order to obtain the benefits of insurance features. 1 
Again a worker may become a member of the union because of an 
inferiority complex. He feels that in this way and only in this 
way may workers hope to stand upon, or approximately upon, 

1 For an excellent statement of the motives of individual unionists, see 
Atkins, W. E., and Lasswell, H. D., Labor Attitudes and Problems , p. 308. 


THE LABOR ORGANIZATION 


83 

a plane of equality with their employers. Furthermore, the motives 
which cause men to take certain steps are often irrational or sub¬ 
conscious. Little irritating episodes, or almost forgotten events, 
may lead an individual to adopt a line of action without a logical 
formulation of motives or a conscious weighing of the advantages 
or disadvantages likely to follow as consequences of the decision. 


GOVERNMENT AND STRUCTURE 

The methods and governmental policies of American labor or¬ 
ganizations of the business type have been developed to meet the 
exigencies of an opportunist program. Immediate results, results 
here and now, and results which are of service to the little group 
directly concerned, are desired rather than indefinite, postponed, 
and generally participated-in benefits. The more capable labor 
leaders may envisage high ideals as to the betterment of the wage¬ 
earning class as a unit; but the rank and file from time to time 
demand immediate action in the hope of benefiting particular 
groups of workers. The successful labor leader in the United States 
has been an exponent of business unionism; he is the man who 
gets higher wages, a shorter working day, and the like, for his 
followers even though the price of success must be paid by other 
unionists as consumers of the products made by the members of 
the first group. A new unionism which actually as well as theo¬ 
retically emphasizes the solidarity of labor and which looks to 
the more distant as well as to the immediate effects of a policy, 
may be rising above the horizon; but the structure of American 
unions of today and the way in which they function are the products 
of selfish groups which do not look far into the future. 

Political government in the United States has progressed from the 
local and decentralized control of colonial times through a period 
of loose confederation, to a form of federal government in which the 
central authority is growing more and more powerful, absolutely 
and relatively. Originally the federal government was created by 
the states, but today the majority of the states of the Union owe 
their existence to direct federal action. A striking and significant 
parallel can be drawn between the evolution of government in the 
American nation and the evolution of control in the strong Ameri¬ 
can labor organizations of today. In the government of labor 


84 


LABOR PROBLEMS 


organizations, the original governmental unit was the autonomous 
local society or union. A local is usually composed of workers 
of the same trade or subdivision of a trade working in one shop or 
in several shops in one locality. It is the basal unit in the structure 
of unionism. Locals are, as a rule, quite democratic; the town 
meeting [form of government will work well when the members 
of a local are approximately on a plane of equality in regard to 
education, income, and social position. Difficulties often arise in 
locals containing different nationalities, Negroes and whites, or 
men and women. Admission to a local is by vote of the members 
in attendance. The average size of a local in the national unions 
affiliated with the American Federation of Labor is approximately 
ioo. The regular meetings of a local are held frequently, but in the 
ordinary times of industrial peace many members fail to attend. 
As a consequence, a small group of officials and their friends often 
dominate a local. The officials of the typical local are a president, 
a vice-president, a secretary, and a treasurer. These are unpaid. 
Some locals, however, have business agents or walking delegates 
who receive salaries. There are usually standing committees such 
as grievance, finance, and executive. The only office in connection 
with a local union which requires special skill is that of business 
agent or walking delegate. This officer is found most frequently in 
the building trades. The business agent is the representative of the 
union in dealing with employers in regard to wages, the redress of 
grievances, and the enforcement of union rules. The national union 
is a federation of local unions in a given trade or industry. The 
United Mine Workers is a national union of the industrial type. 
The International Association of Machinists is one composed of 
trade unionists. District unions subordinate to the national unions 
are also found in certain organizations. 1 

The history of the evolution of governmental power in trade and 
industrial unions has been that of the growth of a national organiza¬ 
tion representing centralized power. Originally the locals were 
knit together into loose federations. Annual conventions were held 
to which delegates from the federated locals were sent, and at which 
the national officers were chosen to serve for the ensuing year. At 
first the delegate convention was chiefly for the purpose of dis- 

1 City and state federations will be explained in connection with the Amer¬ 
ican Federation of Labor. 


THE LABOR ORGANIZATION 


85 

cussion and to bring about unanimity of action among the workers 
in a particular trade. In the early stages of growth, the national 
officers were given little power, and the funds placed at the disposal 
of the national bodies were small in amount. The locals were 
extremely jealous of their prerogatives. But out of these loose and 
decentralized federations of locals, proud of their autonomy, have 
gradually emerged powerful national bodies with considerable in¬ 
comes at their disposal; and their strength is still increasing. The 
delegate convention is no longer an impotent advisory body; it 
has become in many national organizations a true legislative body. 
In turn, the national organizations have become propagandists and 
have instituted new locals under their jurisdiction, and the new 
locals are more readily controlled than were the older ones. How¬ 
ever, the increase in the power and dignity of the national unions 
has not come into being without encountering friction and deter¬ 
mined opposition. The states’ rights doctrine, so famous in 
American history, has its counterpart in the evolution of trade- 
union government. 

Among the forces causing reluctant locals to recognize the 
necessity or the desirability of subordination to the central govern¬ 
mental authority of a national union are: 1. The Growth of Wider 
Market Areas. As long as a small business located in A. had only a 
local market in A., and as long as a similar business located in B. 
had only the inhabitants of B. as purchasers of its product, com¬ 
mon union rules among organized workers in the industry were 
of little, significance. Each local might get the best bargain it 
could from the employers in its locality. After the market 
area widens, and producers in A. and B. sell competitively in C. 
and elsewhere, a new situation obtains. Low wages and long 
working hours for the workers at B. may adversely affect com¬ 
petitors in A., and lead to a demand for reduction of wages, and 
the like. Similar wage levels and similar working rules are now 
desirable for all workers in a particular trade within the competitive 
area. As the market area has expanded, locals have reluctantly 
seen the wisdom of giving to the national organization authority 
to enforce general rules and regulations upon the locals under their 
jurisdiction. In the building trades or in the trade of the barber, 
competition over a wide market area does not as yet take place. 
Within reasonable limits, local increases of wages may be passed 


86 


LABOR PROBLEMS 


on to the consumer in terms of higher prices. The national unions 
in these trades have not as yet been able to become as powerful as 
those in the men’s clothing industry or that controlling the printing 
pressmen. 

2. Concentration and Integration in Industry. As the business 
unit grows, it is obviously difficult for local unions to bargain 
effectively. A national union acting for locals in all parts of the 
nation will be more effective. 3. Persistent Opposition on the Part 
of Employers will help local groups to forget their insistence upon 
home rule, and lead them to rally around the common standard 
of a national union. It is similar to the tendencies within a nation 
threatened by external foes. Domestic differences are in a large 
measure forgotten, and power is freely granted to the central 
governmental authorities. 4. The Use of the Union Label and the 
Boycott. These weapons of labor organizations are of little sig¬ 
nificance unless fostered by a large, rather than a local, group. 
5. The Use of Beneficiary Funds for Aiding Sick or Striking Members. 
As in the case of insurance, national funds are much safer than 
local. 6. The Shifting or Drifting of Workers from one Place to 
Another is also a factor in leading the locals to demand uniform 
rules which can be obtained expeditiously only through an author¬ 
itative national union. 

A group of forces presses in the opposite direction, tending to 
strengthen or to maintain the authority of the locals: 1. The 
Desire for Local Autonomy. The demand for “home rule” in 
governmental units and in labor organizations is quite persistent. 
The national or central government is farther away from the in¬ 
dividual citizen or member. Control or regulation by the national 
government often seems not unlike meddling by an outsider in the 
affairs of an individual and his associates. 2. Local Leaders Fear 
the Loss of Authority as the national organization gains in strength. 
Local governmental officials almost invariably constitute a group 
in active opposition to projects for strengthening the central gov¬ 
ernment. The same is, in general, true in labor organizations. The 
petty officers look upon the local offices as their vested rights. 
3. Inertia. It is not difficult to uphold the status quo. To stand 
for a different order of things requires more of initiative; it is 
disturbing. Except in times of stress, the rank and file usually 
follow the famous line of least resistance. It is easy to get into a 


THE LABOR ORGANIZATION 87 

rut. Inertia induces us to do things as we have been accustomed to 
do them, and to accept as proper the institutions with which we are 
familiar. 

The movement toward unification has gone farther in some 
unions than in others. The details of the structures of different 
labor organizations exhibit great variations. The International 
Typographical Union presents a fairly clear picture of progress 
away from a decentralized form of government. The establish¬ 
ment of the printers’ home, provisions for insurance benefits, and 
the power to supervise collective bargaining, have greatly increased 
the dignity and authority of the national body. A “legal” strike 
must be sanctioned by the national officers. On the other hand, 
unions in the building trades, the Journeyman Barbers’ Interna¬ 
tional Union, and the American Federation of Musicians exhibit 
less of centralization of authority. Public opinion as to labor 
organizations has been formed in no small degree through ex¬ 
perience with the building trades. As a matter of fact, these trades 
constitute rather exceptional forms of trade unionism. The build¬ 
ing trades are skilled trades, performing work which must be done 
in a particular place. A building cannot be constructed — bricks 
laid, wood and iron strips placed in position, plaster spread, and 
painting done — in New York for a building to be used in Chicago. 
The finished product cannot be transported from one city to an¬ 
other; and to date no substitute for housing has been found. 
These facts localize, in a large measure, the interests of the mem¬ 
bers of a building trade. The different trades keep their trade 
autonomy, but since many trades are engaged upon one building, 
their interests are interrelated. The building trades in one city 
may be affiliated together in a Building Trades’ Council. This 
constitutes a sort of confederated system of government. Their 
common interests also find concrete expression in the frequent re¬ 
sort to the sympathetic strike. This insistence upon the sym¬ 
pathetic strike marks an approach toward the policies of industrial 
unionism. The use of the sympathetic strike does not, however, 
reach beyond the building trades. 

Practically all national labor organizations at the present time 
exercise legislative, executive, and judicial functions in regard to 
many matters which affect the subordinate locals. Usually, how¬ 
ever, important matters are subject to a referendum to the entire 


88 


LABOR PROBLEMS 


membership or to the portion of the membership directly con¬ 
cerned with the proposed legislation or policy. The annual con¬ 
vention composed of delegates from the locals is the legislature or 
congress of the national body; the president and an executive 
council exercise executive powers; and the judicial function is 
placed in the hands of the president or some other executive 
officer, usually with the right of appeal to the council or to the 
annual convention in case a local or some group of members is dis¬ 
satisfied with the settlement of some disputed question or with the 
interpretation of some rule or regulation. The militant activities 
in connection with strikes, boycotts, and picketing of the larger and 
more responsible unions at least, are directed by the national 
officers. 

THE CLASSIFICATION OF LABOR ORGANIZATIONS 

Organizations of wage earners may be technically classified as 
labor unions, trade or craft unions, and industrial unions. The 
significance of the labor union is chiefly historical. Into the labor 
union all classes of wage earners were gathered; and employers and 
professional men were often admitted. The labor union was 
idealistic or humanitarian in its aims. The strike and the boycott 
were rarely used; but reliance was placed upon land reform, 
education, cooperation, the direction of public opinion, and political 
activity. The leaders of the labor unions were wont to make much 
of the point that the interests of labor and capital were funda¬ 
mentally harmonious; and that betterment came through the 
united efforts of all classes. The labor congresses of the forties 
were excellent examples of this type of labor organization. The 
Knights of Labor might also be classified as a labor union. The ex¬ 
istence of this form of organization indicates the lack of class 
consciousness and an absence of any clear idea of the solidarity of 
the working class, or of any section of it. The trade or craft union 
is an organization among the workers in a given trade. Its members 
demand collective bargaining and have a concept of a “fair wage.” 
The trade union is essentially a business organization formed to 
make the best possible bargain with employers for the commodity 
— labor power — which its members desire to sell for a price — 
wages. Each group or trade bargains independently of other groups 
or trades. The trade union stands for group action rather than for 


THE LABOR ORGANIZATION 


89 

.united action on the part of all wage earners irrespective of occupa¬ 
tional lines. It accepts the strike and the boycott as valuable 
weapons; and it usually considers political activity as something 
to be avoided. The International Molders’ Union of North America 
and the International Typographical Union are examples of trade 
unions. An amalgamated union is an extended form of trade or 
craft unionism. Nearly all trade unions are in some degree amalga¬ 
mated. The Amalgamated Clothing Workers include all types 
of workers in the men’s clothing industry who are directly con¬ 
nected with the manufacture of clothing, such as cutters and 
pressers. The United Brotherhood of Carpenters and Joiners is an 
amalgamated organization. It now includes machine wood work¬ 
ers and furniture workers as well as the workers normally known as 
carpenters. The name of another labor organization offers an 
illustration of amalgamation — the International Association of 
Marble, Stone, and Slate Polishers, Rubbers, and Sawyers, Tile 
and Marble Setters’ Helpers and Terrazzo Workers’ Helpers. 
Many unions today are in a twilight zone between the trade and 
the industrial form of organization. These may be classified as 
amalgamated unions. 

The most recent type of labor organization is the industrial 
union. It cuts across craft lines and aims to unite all workers in 
one industry into a coherent and centrally controlled organization. 
In this variety of union, the friction due to overlapping craft 
jurisdictions is in a large measure obviated. When an industrial 
union orders a strike, all the workers in an establishment go out 
together and share in the expenses and the benefits. The United 
Mine Workers of America is an example of an industrial union. 
This organization claims jurisdiction over all persons working in 
or around a union coal mine. A carpenter or a stationary engineer 
working in a union coal mine must join the United Mine Workers. 
The skilled and the unskilled are knit together. The advocates 
of industrial unionism urge that it is more important to unite all in 
an industrial group than to organize all in a given trade but scat¬ 
tered far and wide throughout the nation. The most radical form of 
industrial unionism, such as the Industrial Workers of the World 
represents, declares that labor and capital have nothing in common. 
The advocates of industrial unionism assert that concentration and 
integration of industry have made trade or craft unionism obsolete. 


90 


LABOR PROBLEMS 


The older form of labor unions was too broad in its scope. It laid, 
too much stress upon the humanitarian aspect of labor problems; 
it was too altruistic and visionary, and not sufficiently practical. 
A successful and permanent labor movement must be nourished on 
the immediate, the practical, and the tangible — that is, on the 
hope of higher wages, shorter working days or weeks, better shop 
conditions, and better homes, rather than upon high ideals of the 
brotherhood of man and the greatest good to the greatest number. 
In the long run, altruism, without a generous admixture of egoism, 
does not provide a practical foundation for a labor organization or 
for an employers’ association. On the other hand, the growth in the 
number of the unskilled and the increasing use of subdivision of 
labor have forced the trade unionists in some industries to unite 
with the unskilled and to aid the latter in fighting his battles. The 
skilled man fears the encroachment of the cheap and unorganized 
workers. He believes in organization and higher wages for the 
unskilled because he in turn will be benefited. Even the trade 
union is becoming the union of the unskilled and semi-skilled as 
well as of the skilled. The egoism of the skilled man is assuming 
the garb of altruism; aid rendered the unskilled in the end often 
benefits the skilled. 

Labor organizations may also be classified according to “func¬ 
tions,” or more accurately according to methods employed. The 
late Professor R. F. Hoxie distinguished three main forms — 
business, uplift, and revolutionary unionism. The trade unions 
affiliated in the American Federation of Labor are business unions. 
The members of business unions are trade-conscious or job¬ 
conscious; they emphasize wage bargaining and immediate results. 
The business unionist is conservative and practical. He is anxious 
to obtain higher wages and better working conditions here and now. 
This conservative type of unionist is little concerned about the 
effect of such militant policies as strikes, boycotts, or restriction of 
output upon the general public. The business union is not unlike, 
in its policies and outlook, a business operated primarily for im¬ 
mediate profits. When increased profits may temporarily be made 
by closing down or reducing output, such a program is almost 
invariably followed. Unfortunately, it is also true that the indefi¬ 
nite entity called the general public is rarely genuinely solicitous 
about the welfare of the wage workers. Uplift unionism is an 


THE LABOR ORGANIZATION 


91 


idealistic type of organization; it is likely to stress insurance and 
cooperation. The Knights of Labor may be classified as an uplift 
union. It has been suggested that uplift unionism is merely a young 
and weak form of unionism. Revolutionary unionism represents 
an extreme type of a class-conscious group. The Industrial Work¬ 
ers of the World is a revolutionary union. A fourth type may be 
termed predatory unionism. It is business unionism gone wrong. 
The predatory union is corrupt and boss-ridden; in some forms it 
may resort to terrorism, as have on occasion a distressingly large 
number of labor organizations. 

Organized labor is a social phenomenon; it is a form of institu¬ 
tion. The form, methods, ideals, and immediate purposes of labor 
organizations may be studied in the same way as political parties 
or fraternal organizations may be analyzed. A union consciously 
or unconsciously adopts a certain form or structure as an aid in 
accomplishing its aims. No institution would come into being 
were it not intended, deliberately or fortuitously, to effect certain 
changes in the course of human affairs. And no form of organized 
labor would exist unless wage workers hoped to obtain through its 
agency some improvement in living and working conditions. These 
statements are little short of axiomatic. In short, both the struc¬ 
ture and the methods of a labor organization or of any other 
institution are the visible and tangible results of underlying forces 
and causes which spring out of the physical and social environ¬ 
ment. The analysis of a labor organization is a study in social 
mechanics. To classify labor organizations according to structure 
or according to methods may be desirable; but the classifier should 
remember that he is dealing only with outward manifestations and 
results, not with causes and fundamental motives. 

The union — a social structure or organization — is a grouping 
of wage workers for the purpose of accomplishing certain results. 
The union is a tool; it is a means to an end. The form of organiza¬ 
tion is not of primary significance. Labor organizations vary 
greatly in form, ideals, and programs. Students of government 
realize that the term — “a democratic government,” for example 
— will be translated differently in Haiti and in the United States. 
Nevertheless, classification of governments into republics, consti¬ 
tutional monarchies, and so on, is of value to students of political 
science. It is doubtless true in a broad way that democratic forms 


92 


LABOR PROBLEMS 


of government are the products of the change known as the Indus¬ 
trial Revolution; but the presence of danger from outside foes may 
retard progress toward a democracy, as witness Germany before 
the World War. Again, tradition may keep the shell of a govern¬ 
ment long after its reality has vanished, as is the case in England. 
In like manner, opposition from without, tradition, or the pressure 
of leaders, may greatly modify the course taken in evolving the 
structure and methods of a labor organization. 

In the great majority of cases, a given structure or form of gov¬ 
ernment or of a labor organization more truly represents a past 
than a present balance of forces; but it is also a factor in determin¬ 
ing the present-time attitude of those adhering to the government 
or labor organization in question. After an institution has been 
developed and has crystallized into certain forms, this somewhat 
inelastic structure usually serves as a modifying and conserving 
force or influence. Group and institutional inertia must be reck¬ 
oned with in any study of social and institutional forms. American 
legal and constitutional forms have greatly modified the course of 
events in American national life. The prevalence of social customs 
and habits also tends to prevent rapid changes in ideals. The 
psychology of the American has undoubtedly lagged behind the 
unusually rapid changes which have taken place in industry during 
recent decades. The American workman has been too individualis¬ 
tic to cope effectively with the great and steadily growing aggrega¬ 
tions of capital; to many of the wage workers there yet clings the 
restless and impatient vitality and self-assurance of the frontier. 
The effect of social inertia is also plainly visible in the ideals, the 
concepts, and the psychology of the unionist. The psychology of 
the typical unionist is still measurably affected and modified by 
ideals and concepts crystallized during the outgrown era of small- 
scale, non-integrated industry. Again, overworked and under¬ 
trained workers will have a narrower vision than more efficient 
and better trained ones. A union composed of the former will be 
more erratic and less calculating than one composed of the latter 
type. 

No two types of workers have been subjected to exactly the same 
economic pressure, the relations between workers and their em¬ 
ployers vary greatly in different lines of business, the possibility of 
displacement by other workers or by machines likewise varies from 


THE LABOR ORGANIZATION 


93 


trade to trade and from occupation to occupation, and price levels 
and standards of living are subject to rapid modifications. This 
complex situation is further complicated by the institutional lag 
exhibited by organizations of labor. And the influence, conserva¬ 
tive or radical, of the capable and aggressive leader must not be 
neglected. Samuel Gompers, for example, is a factor which cannot 
safely be overlooked in any careful consideration of the evolution 
of the American Federation of Labor. The autocratic and im¬ 
perious leader has played an important role in labor organizations 
as well as in the affairs of nations. The appeal to the passions and 
emotions figures in union matters as well as in party politics. 

The trade union is the fundamental and most natural grouping 
of workers for betterment. In the trade union are associated work¬ 
ers engaged in similar work and interested in similar matters. 
Carpenters have more in common with other carpenters than with 
boilermakers or molders. But as the machine process undermines 
trade after trade and threatens to reduce multitudes of laborers to 
a common denominator, trade or craft becomes of less and less 
importance. As carpenters, molders, and boilermakers become 
united as employees of the same corporation, trade lines yield to 
the unity of interests of employees of one big business organization. 
As a consequence, the tendency to organize by trades begins to be 
replaced by organization in which trade lines are less prominent. 
The structure of unions changes and the specific methods employed 
may undergo modification; but the prime purposes for which 
unions are formed are not transformed. 

It may therefore safely be asserted that the prime factors in a 
study of labor organizations are not: Is the union a trade or an 
industrial union; or, Is its purpose bargaining or bringing about a 
social revolution? The important questions are: Why has this 
particular union adopted the ideals, form, and methods which are 
now associated with it? What are the internal and external, 
present and past, forces which determine its path today? Any 
classification whether according to structure or methods is of value 
only in making clear the factors in the labor problem. A study 
of industrial and social forces is essential in an investigation of labor 
organizations. 


94 


LABOR PROBLEMS 


WHAT CHARACTERISTICS INDICATE STRENGTH 
IN UNIONS? 

The following tentative list for scoring the strength of unions is 
presented for discussion: 


Inclusiveness 

Leadership 

Finances 


Numbers 

Solidarity 

Aggressiveness 


Pension and Insurance Systems 


Obviously, a union which ranks high in all of these characteristics 
will be a powerful and virile organization. A particular union may 
score well in regard to certain traits and low as to others. A labor 
organization with a large membership but lacking in solidarity or 
in aggressiveness will be weak. A union with a small membership 
but one which includes all or nearly all of the workers in that trade 
or occupation may be powerful. Solidarity, or a feeling of unity 
or a consciousness of like interests, is a trait which lends strength 
to an otherwise weak aggregation of individuals. The members 
of an organization exhibit solidarity when they are willing to 
sacrifice individually for the good of the group. A union with funds 
in its treasury will be stronger than one possessing other traits in 
the same measure but without funds in its treasury. A labor 
organization having a pension or insurance system will find it 
helpful in uniting its membership and giving them common aims. 
Capable and loyal leaders are important factors in the growth and 
virility of any type of organization. 

Traditionally, it has been asserted, 1 American trade unions have 
possessed two outstanding elements of strength — skill, and a 
certain amount of physical force, the menace of an aggressive mem¬ 
bership, which puts fear into the hearts of other workers ready to 
take the jobs of unionists in the case of an industrial dispute. The 
old conflict psychology, characteristic of business unionism in the 
era of Samuel Gompers, is becoming out-of-date and, in an in¬ 
creasing degree, futile. Many of the old and familiar crafts are 
being broken down by machinery and scientific management into 
elements which require dexterity rather than skill or craftsmanship. 
For example, the skill of the glass-bottle blower is not needed by 
1 Atkins, W. E., and others, Economic Behavior, Vol. 2, p. 211. 


THE LABOR ORGANIZATION 


95 


the operator of the bottle-blowing machine. As the craft is broken 
up into simpler elements or rendered obsolete, the size of the 
business unit tends to increase. As a consequence, it has become 
more and more difficult in many industries to prevent outsiders 
from taking the jobs of strikers and other dissatisfied workers. 
As will be noted again, American unionism today is not strong in 
those industries in which the machine, scientific management, and 
large industrial units dominate the situation. The traditional 
weapons of business unionism, the strike, the boycott, and picketing 
are practically useless when a trade union confronts a large cor¬ 
poration or nest of inter-related, large-scale business units. 

WHAT ARE THE CHARACTERISTICS OF A 
“good” UNION? 

Excellence in unionism depends largely upon the point of view. 
To the unionist, a good union is one which aids its members in 
getting a better bargain with employers than can the non-union 
man obtain who bargains individually. A good union spells higher 
wages, more leisure, and better working conditions than would be 
obtained without such an organization. To the typical employer, 
a good union is one which is not aggressive or is without teeth. 
From the point of view of the majority of employers, a good union 
will accept the leadership of the management. If one attempts 
to look at the question from a neutral or impartial point of view, 
perhaps three factors may be mentioned in a score-sheet for good¬ 
ness in unionism: 

Attitude toward production 
Attitude toward violence 
Willingness to use conference methods 

A union which emphasizes workmanship and does not con¬ 
sciously restrict output except to prevent overdriving may be 
considered as possessing certain elements of desirability. It is 
difficult for the bystander to give the crown of goodness to a union 
which uses strong-arm methods. The neutral is also inclined to 
stress the desirability of substituting conference methods — trade 
agreements, mediation, and arbitration — for strikes and boy¬ 
cotts. The question of excellence in unionism depends largely 


LABOR PROBLEMS 


96 

upon one’s concept of the legitimate aims of a labor organization; 
it hinges in no small degree upon what one considers to be justifiable 
demands for higher wages, shorter hours, and the like. The loco¬ 
motive engineers are often pointed to as having a “good” union 
because its members are skilled men who have rarely resorted to 
violence. It should, however, not be overlooked that, in case of a 
strike, their places cannot easily be filled. The engineers might 
merely go home; they would not be replaced by green hands. If, 
however, their places could easily be filled from the lists of un¬ 
employed in our employment agencies, it is possible that picketing 
and open and veiled threats of violence might be adopted as the 
tactics of the locomotive engineers. Are unions “good” because 
their members do not confront dangerous competition, because the 
membership is not tempted to resort to violence by the sight of 
“scabs” taking the jobs in which they feel a vested right? A 
powerful union, one which would receive a high score for strength, 
rarely needs to use violence; it can obtain its reasonable demands 
by conference methods. 


LEADERS IN LABOR ORGANIZATIONS 

During the early history of American labor organizations, 
capable and discontented workers expected to rise out of their 
group and become small employers, or they moved West and 
became pioneer farmers. America was confidently advertised to 
be a land of opportunity, of extraordinary gains. The man with 
initiative and ability craved the unusual opportunity gains which 
a new country blessed with great undeveloped resources offered 
to the fortunate and the aggressive. The leadership which comes 
through remaining in a particular class and helping to lift the entire 
group was in a large measure absent. The individualism fostered 
by the presence of the westward-moving frontier militated against 
strong and permanent leadership in the American labor movement. 
With the disappearance of the frontier and with the concentration 
of wealth and of the control of business affairs in the hands of a 
comparatively small number of persons, and with the increasing 
prevalence of routine and regularity in industry, not only were the 
traditional outlets for the ambitious wage workers closed, but many 
who under a more crude economy would have been small business 


THE LABOR ORGANIZATION 


97 


men found a place in the ranks of the employed. The potential labor 
leader was more interested in his own welfare than he was in group 
betterment or solidarity. Sagacious industrial managers soon rec¬ 
ognized that unless a substitute outlet was provided, they would 
soon confront unions directed by talented, devoted, and class¬ 
conscious leaders. Promotion and political preferment offer im¬ 
portant outlets for the ambitious and the radical. The man who 
is being gradually promoted, or who sees dangling before his eyes 
a political job, is furnished with a potent incentive for conserva¬ 
tism. “Thus it is that a wise system of promotion becomes another 
branch of industrial psychology. If scientifically managed, as is 
done by the great corporations, it produces a steady evaporation 
of class feeling. I have often come upon fiery socialists and ardent 
trade unionists thus vaporized and transformed by this elevating 
process.” 1 

In spite of these obstacles union leadership in the United States 
has exhibited a considerable degree of stability. As the national 
and international unions became more and more powerful, the 
increased responsibilities placed upon union officials have been 
accompanied by longer tenure of office and larger salaries. With 
the exception of one year, beginning November, 1894, Samuel 
Gompers was President of the American Federation of Labor from 
its inception in 1886 to the date of his death in 1924, which occurred 
soon after he was again re-elected. The present president (1932), 
William Green, who had been a union official for many years, 
succeeded Gompers. Adolph Strasser was President of the Cigar 
Makers’ Union from 1877 to 1891, at which time he refused a re¬ 
nomination. He then became financier of the organization. P. M. 
Arthur died in 1903 after serving thirty years as the chief executive 
of the Brotherhood of Locomotive Engineers. His successor, 
Warren S. Stone, held the office until the time of his death in 1925. 
Sidney Hillman has been President of the Amalgamated Clothing 
Workers since 1915. In many local and national organizations, 
seniority prevails; new blood is rarely introduced into labor 
leadership. 

A well-known phenomenon in American politics has been the loss 
of confidence in legislative bodies and the growth of interest in 
forceful executives. The American people are inclined to worship 
1 Commons, J. R., American Journal of Sociology, Vol. 13, p. 761. 


98 


LABOR PROBLEMS 


strong leaders, such as Theodore Roosevelt and Andrew Jackson. 
This characteristic has been reflected in a measure into the affairs 
of labor organizations. If a leader “delivers the goods” unionists 
are not prone to inquire about the methods employed. In a democ¬ 
racy it is necessary to get things done; and getting results means 
leadership and organization — perhaps a political machine. It is not 
otherwise in labor organizations. It is inevitable that a group which 
is credited with worthwhile accomplishments will have conspicuous 
leadership. It is generally conceded by the friends and foes of or¬ 
ganized labor that the officers of the national bodies are, as a rule, 
men of good character and unusual ability. As has been frequently 
noticed in the case of radical and “unsafe” men who have been 
elected to positions of great power in the political field, the exer¬ 
cise of authority and the weight of heavy responsibilities seem to 
bring conservatism and sobriety of action. On the other hand, labor 
leaders who accept a salaried office and no longer work at their trade 
are in danger of getting out of touch with the rank and file. The 
points at issue no longer directly concern the salaried official. As 
in the political arena, the greatest official inefficiency is usually 
found in the local organization. The “labor boss” and the “labor 
grafter” are not unknown; but wholesale condemnation of labor 
officials and “walking delegates” is not justified. Absentee control 
of labor organizations like absentee control of corporations has 
certain disadvantages; but the employer who stands ready to 
penalize an aggressive local leader must expect absentee leadership. 

When labor leaders remain in office year after year it becomes 
easy to build up a machine through the power of appointing 
officers and committees. The control of the convention by union 
machine gives much strength to the existing regime. The in¬ 
surgents in labor conventions, or in Congress, are at a disadvantage. 
In the old-line conservative unions many of the leaders have been 
in office a long time and are well advanced in years. In 1925, of 
the twenty national officers of the International Molders’ Union 
the youngest was born in 1881. In the past, because of the bitter 
opposition of employers, unions have been forced to function as war 
machines. As an inevitable result, when internal conflicts arise or 
demands are made to displace the leaders now in power, the 
officers appeal to war psychology. It is vehemently asserted that 
the union must be preserved; and the opponents of the existing 


THE LABOR ORGANIZATION 99 

regime are called disrupters. Opposition to the administration be¬ 
comes treachery and treason; the insurgents are said to be opposing 
the will of the people. It is urged that they are fighting the great 
rank and file. The leaders always assume that in order to save the 
union it is necessary to keep the control of the organization in the 
hands of the present leadership. 


AMERICAN LABOR IN POLITICS 

In recent decades, labor parties have played a significant role 
in several European countries; but in the United States no similar 
phenomenon can be observed. A labor party is not a substitute for 
unionism; but it may supplement unions. The political activities 
of American labor organizations have not been outstanding; such 
activities as they have indulged in seem to have been chiefly 
directed toward the achievement of two purposes. (1) The fore¬ 
most purpose has been to secure legislation removing the hindrances 
to the bargaining activities of labor organizations and improving 
the working conditions in factories. This is the ordinary form of 
labor legislation. (2) Legislation has been demanded which will 
improve the living conditions of the workers and which will tend 
to reduce inequalities of opportunity. 

The causes of the weakness of American labor in the political 
field are a multitude. The traditional two-party system in the 
United States has placed obstacles in the way of a labor party. 
Prestige, patronage, and power go with membership in one of the 
two old parties. Loyalty to a party is in a discouraging number of 
cases passed from father to son, from one generation to another. 
A third party finds many proud of their old party labels. Those 
who attempt to organize a new national labor party must fight a 
long up-hill struggle without any taste of the fruits of victory. 
Many cling tenaciously to the old parties anticipating the getting 
of some political plums when patronage is passed around. The 
American constitutional system with its famous scheme of checks 
and balances, and the dual form of government, state and national, 
also add greatly to the difficulties which a new progressive or radical 
party must overcome before it can actually obtain tangible ad¬ 
vantages for its adherents. Labor organizations have found their 
work to be in securing immediate benefits from their employer in 


IOO 


LABOR PROBLEMS 


the shape of higher wages and better working conditions. For a 
labor organization to enter the political field signifies that it must 
turn aside from the work in which its successes have been scored 
and enter a new field. Political action brings in slower returns and 
benefits which are more widely distributed. The presence of large 
numbers of immigrants, many of whom were non-voters, has also 
militated against the organization of a strong and coherent labor 
party. In recent years, this difficulty is becoming of less im¬ 
portance. 

Since the organization of a local labor party in Philadelphia in 
1827 to the present time, numerous attempts have been made to 
form labor and farmer parties. None of these have achieved more 
than local and temporary successes. Nearly all have made unin¬ 
spiring failures. The labor movement of the twenties of last 
century was wrecked by the workingmen’s parties of 1828 to 1831. 
The labor parties of the early seventies were not notably successful. 
The Knights of Labor suffered because of dabbling in politics. The 
business unionists of the bodies affiliated in the American Federa¬ 
tion of Labor have not dissipated their energies in attempting to 
organize labor parties. An organization stressing an opportunist 
policy cannot be expected to look with favor upon the formation 
of a labor party. Local victories by a labor group in a city, for 
example, would, however, give advantages to the union man. He 
would no longer be discriminated against by the city government, 
and many public jobs would go to the workers. The police and the 
local judges would be more friendly to workers and to organized 
labor. 

While the American Federation of Labor advised its members, 
in a perfunctory manner, to vote for their friends regardless of party 
lines, it did not, before 1906, take any significant part in political 
activities. In that year, the executive council issued a campaign 
program for the purpose of removing “all forms of political servi¬ 
tude and party slavery.” The executive council demanded the 
defeat of all candidates who were hostile or indifferent to the 
interests of labor. In case both parties nominated such men, it was 
urged that a third candidate be placed in the field. In the Presiden¬ 
tial campaign of 1908 President Gompers actively endeavored to 
induce the workingmen to support the Democratic ticket, and he 
estimated that about eighty per cent of the votes of organized labor 


THE LABOR ORGANIZATION 


IOI 


were cast as recommended by the Federation. In 1924, organized 
labor generally supported LaFollette’s independent candidacy for 
the Presidential chair; but after the campaign was over the 
American Federation of Labor again affirmed its adherence to the 
old policy of voting for its friends, of being partizan to principles 
rather than to parties. In 1932, there was no immediate probabil¬ 
ity of the organization of a labor party in the United States. The 
Workers’ (Communist) Party and the Socialist Party claim to 
represent labor as a class; but only a small percentage of the rank 
and file of American workers have joined either of those parties. 

REFERENCES 

Atkins, W. E., and Lasswell, H. D., Labor Attitudes and Problems 

Carlton, F. T., Organized Labor in American History , Chaps. 8-10 

Carroll, M. R., Labor in Politics 

Furniss, E. S., Labor Problems, pp. 223-227, 398-420 

Hardman, J. B. S., American Labor Dynamics, Chap. 22, by Eldridge, S. 

Hoxie, R. F., Trade Unionism in the United States, Chap. 3 

Hunter, R., Labor in Politics 

Perlman, S., History of Trade Unionism in the United States, Chap. 14 


CHAPTER VI 


THE AMERICAN FEDERATION OF LABOR 

HISTORY 

In 1881, a successful attempt was made to unite into a federation 
a group of national unions of skilled workers. This organization 
was given an awkward name — the Federation of Organized Trade 
and Labor Unions of the United States and Canada. In 1886, out 
of a re-organization came the American Federation of Labor. A few 
years later the American Federation began to count 1881 instead 
of 1886 as the date of its birth. The Federation grew slowly during 
the first years of its existence; the number of members recorded 
at the time of the annual meeting in 1890 was 190,000. The 
figures in the table below are the official statistics representing the 
membership upon which the per capita tax was paid by the affiliated 
unions into the treasury of the American Federation of Labor. 
The United States Bureau of Labor Statistics reports the member¬ 
ship of the affiliated national and local unions of the American 
Federation as 3,383,597 in 1926, and 3,510,427 in 1929. 1 


Year 

Membership 

Unions Affiliated 

1897 

264,825 

55 

1900 

548,321 

82 

1903 

1,465,800 

113 

1904 

1,676,200 

120 

1905 

1,494,300 

118 

1908 

1,586,885 

1 15 

1914 

2,020,671 

no 

1918 

2,726,478 

in 

1919 

3,260,068 

in 

1920 

4,078,940 

no 

1922 

3 P 95 , 65 i 

no 

1924 

2,865,979 

107 

1926 

2,803,966 

107 

1928 

2,812,526 

107 


1 Bulletin Nos. 420 and 506. 


102 


THE AMERICAN FEDERATION OF LABOR 


103 


Year 


Membership 

2 , 933,545 

2,961,096 

2,889,550 

2,532,261 


Unions Affiliated 
105 

104 

105 

106 


1929 

1930 

1931 

1932 


The official figures may not be entirely trustworthy. In the 
earlier years of the history of the Federation some locals were 
supposed to be tax-dodgers. In recent years, however, several 
organizations pay dues upon the same number of members year 
after year. It appears to be a reasonable assumption that the 
official figures represent the number of members that the national 
officers see fit to pay dues for, instead of the exact number of mem¬ 
bers. For example, the statistics presented by the American Fed¬ 
eration of Labor show that the United Mine Workers had a 
membership of 400,000 each year from 1925 to 1930, inclusive; but 
there are ample reasons for believing that the actual membership 
did not remain unchanged during the period. 1 By paying dues 
upon 400,000 members the miners retained their voting strength 
in the annual meeting of the Federation. The Electrical Workers 
are credited with 142,000 members during the entire period, 1922- 
1930, inclusive. Members engaged in strikes and lockouts do not 
pay dues; and they are not included in the official figures. In 
recent years, at least, it may be questioned whether the American 
Federation of Labor figures of membership present accurately the 
actual membership of the affiliated unions. 2 

During the five-year period, 1900-1904, the growth of member¬ 
ship was considerable. For example, the gain between 1902 and 
1904 was greater than the membership in 1900. After 1904 came 
a temporary check; not until 19n did the membership equal that 
recorded in 1904. In 1914, the two million mark was passed; but 
a slump the following year left the membership less than two 
millions. In 1920, union membership reached its high-water mark. 
With the depression, the return of the railways to private opera- 

1 The Bureau of Labor Statistics estimated the membership of the United 
Mine Workers as 500,000 in June, 1926, and 450,000 in June, 1929. A consid¬ 
erable reduction in membership doubtless occurred in 1929-1932. 

2 J. E. Kucher in American Labor Dynamics makes the following pertinent 
comment upon certain national unions: “Farsighted investments assure a 
permanent income sufficient to meet the pay-roll of the official family, enabling 
them to exist, to pay per capita, and retain A. F. of L. status.” (p. 305) 


io 4 


LABOR PROBLEMS 


tion, and re-adjustments due to the return to peace basis, the re¬ 
ported membership of the American Federation of Labor dropped 
from 4,078,740 in 1920 to 2,803,966 in 1926. In the five-year period, 
1926-1930, the rebound was very slight — less than 160,000. A 
small fraction of the membership of the Federation is located in 
Canada. In 1930, practically all of the important labor organiza¬ 
tions of the United States were affiliated in the Federation except 
the four brotherhoods of engineers, firemen, conductors, and train¬ 
men, and the Amalgamated Clothing Workers. The Industrial 
Workers of the World and a few communistic organizations are 
antagonistic to the American Federation of Labor; but their 
membership is small. The Bureau of Labor Statistics in 1929 
found 40 national labor organizations outside the Federation. 
The following table gives the total membership of American labor 
organizations as estimated by Dr. Leo Wolman of the National 
Bureau for Economic Research. 1 


Year 

Membership 

Year 

Membership 

1897 

447,000 

1915 

2,607,700 

1900 

868,500 

1920 

5,110,800 

1904 

2,072,700 

1923 

3,780,000 

1910 

2,184,200 

1929 

4 A 39,934 2 


The growth in membership has proceeded at a very irregular 
pace. There have been two periods of marked advance in member¬ 
ship in the history of the American Federation of Labor, 1900-1904, 
and 1917-1920. Before 1900, from 1904 to 1917, and since 1926, 
the growth of the Federation was very deliberate. The periods, 
1904 to 1906 and especially 1920 to 1926, registered considerable 
losses in membership. The first period of rapid growth followed 
upon the heels of an era noted for the rapid growth of large business 
aggregations; the second covered the latter portion of the war 
period and the opening years of reconstruction. In the years 
intervening between 1904 and 1907, the policy of antagonism on 
the part of great corporations and powerful employers’ associations, 
and the hostile attitude of the courts as evidenced by certain 
important decisions, were factors which retarded the growth of 
organized labor in the United States. About 1910 certain students 
of the labor situation reached pessimistic conclusions as to the 

1 Growth of American Trade Unions, 1880-1923, p. 33. 

2 Estimated by the Bureau of Labor Statistics, Bulletin No. 506, p. 4. 


THE AMERICAN FEDERATION OF LABOR 


*°S 

immediate future of organized labor in this country. Professor 
Commons declared that “the unions have practically disappeared 
from the trusts, and are disappearing from the large corporations 
as they grow large enough to specialize minutely their labor.” 
The attitude of certain large employers of labor has changed but 
little in the years which have elapsed since this statement was 
made. 1 

STRUCTURE 

The American Federation of Labor is a federation of unions; 
it is an organization of labor organizations. It represents a con¬ 
federation of unions of wage earners. There is no side door through 
which employers and other non-wage earners may enter. The 
Knights of Labor was not exclusively a wage worker’s organization; 
the constituent bodies of the American Federation are. It is an 
organization of job-conscious men and women. The individual 
members have little or no direct relation to it. The basic unit in 
the organization is the local union, which includes only members 
who live and work in one town. The locals are required to join 
the national union in their trade. A local is also expected, but not 
required, to affiliate with the central labor union of the town or 
city in which it is located and the state federation, if one is organ¬ 
ized in that state; and the latter bodies may not admit delegates 
from unions not affiliated with the Federation. A local union of 
machinists in Chicago, for example, is affiliated with the Interna¬ 
tional Association of Machinists, the Chicago Federation of Labor, 
and the Illinois Federation of Labor. The national trade union, 
the city central union or city federation of labor, and the state 
federation are each in turn affiliated with the American Federation 
of Labor. With few exceptions local unions are affiliated with 
the Federation only indirectly through a national union. If no 
national union in the trade or occupation exists, the local may be 
directly affiliated with the Federation. A “federal labor union” 
is a mixed local union; such bodies are sometimes formed where 
local trade unions are impracticable for lack of numbers. These 
unions are “recruiting stations.” As soon as a sufficient number 
of workers of one trade or occupation are gathered into a federal 

1 The reasons for the marked tendency of American unions to mark time in 
recent years will be discussed later. 


io6 


LABOR PROBLEMS 


union they are expected to organize a separate local. The federal 
unions are affiliated directly with the Federation. National or 
international unions are federations composed of locals in a given 
trade or industry. As was indicated in the preceding chapter, the 
authority and duties of national bodies vary greatly. Some na¬ 
tional bodies exercise strict control over the subordinate locals; 
others have little more than advisory power. The chief purpose 
of state federations is political. They aim to secure the passage 
of legislation deemed to be favorable to the interests of wage 
earners, and to defeat hostile legislation. City central labor unions 
are founded for the purpose of enabling “all organized labor in the 
city to act promptly in emergencies, and thus mutually help each 
other in labor difficulties by bringing to bear at once the combined 
influence of all labor organizations to effect a settlement.” No 
city central labor union, however, has the right to inaugurate a 
strike until the proper authorities of the national body or bodies 
concerned have given their consent. City central labor unions 
frequently exert considerable political influence in municipal poli¬ 
tics and government; and they aid in molding public sentiment in 
favor of unions and unionism. Departments may be established 
subordinate to the Federation. The Building Trades Department 
attempts to iron out difficulties which may arise from time to time 
between different unions in the building industry, and “to create 
a more harmonious feeling between employer and employee.” 
Departments are only advisory bodies. 

In 1931, the American Federation of Labor included 105 national 
and international 1 unions, 49 state federations, 728 city central 
labor bodies, 334 “local trade and federal labor unions” unaffiliated 
with a national or international union, and four departments. 
The Federation is an advisory body. It recognizes the autonomy 
of each national and international union. Practically the only 
disciplinary measure which the Federation is able to use is to 
threaten, and finally, to take away the membership privilege in 
the organization from a recalcitrant affiliated member. Since 
there are several labor organizations voluntarily outside the Fed¬ 
eration, evidently deprivation of membership is not particularly 
effective as a disciplinary or regulatory measure. The ultimate 

1 There is no marked difference between a national and an international 
union. The latter has locals in Canada as well as in the United States. 


THE AMERICAN FEDERATION OF LABOR 107 

source of authority in the Federation is found in the affiliated 
national and international bodies. At the annual convention of 
the American Federation each national union is allowed one dele¬ 
gate for each four thousand paid-up members, or for any fraction 
of that number. For example, a national union having three 
thousand members would be allowed one delegate; if the member¬ 
ship were seven thousand five hundred, it would be allowed two. 
State federations, city central unions, departments, federal labor 
unions, and local unions having no national union may send one 
delegate each. Each delegate of a national union or of a local trade 
or federal labor union is allowed one vote for every hundred mem¬ 
bers, or major fraction thereof, who have paid the per capita dues 
to the Federation. City central bodies, state federations, and 
departments are allowed one vote each. At the 1930 convention, 
out of a total of 29,524 votes, 29,349 were cast by delegates of the 
national and international unions. These national bodies consti¬ 
tute the backbone of the American Federation of Labor; the other 
affiliated organizations exercise little influence in the affairs of 
that body. The officers are elected at the annual convention. 
They consist of a president, eight vice-presidents, a secretary, and 
a treasurer. These officers also constitute the executive committee. 
The term of office is one year; but re-election year after year is the 
usual order of events. The headquarters of the Federation are 
located in Washington, D. C. 

According to its constitution, the chief purposes of the American 
Federation of Labor are to knit the national and international 
unions together for mutual assistance, to encourage the sale of 
union-label articles, to secure legislation favorable to the interests 
of the working people, to influence public opinion in favor of or¬ 
ganized labor, to aid and encourage the labor press, and to assist 
in the formation of local unions. The revenue of the Federation 
is derived from a per capita assessment upon the members of 
a ffili ated bodies. International and national unions pay one cent 
per member per month; local trade unions and federal labor unions 
pay thirty-five cents per member per month, but twelve and one- 
half cents of this amount must be set aside to be used only in case 
of a strike or lockout; city central unions and state federations pay 
ten dollars per year. The executive council of the Federation has 
the power to levy one cent per member per week on all affiliated 


io8 


LABOR PROBLEMS 


unions, for a period of not more than ten weeks, for the support 
of an affiliated national union engaged in a strike. During the 
period 1881 to 1886 inclusive, the annual income of the Federation 
varied from $125 to $690. In 1890, it was $23,849; in 1900, 
$71,126; in 1909, $232,378; and, in 1930, $560,603. The total 
expenditures for 1930 were $531,443. 

The aims, ideals, and government of the Federation are almost 
opposite to those of the Knights of Labor. The former is a federa¬ 
tion of trade unions, although some industrial unions are now 
included. Theoretically the Federation favors trade unionism 
rather than an industrial unionism; but in practice its policy has 
been opportunist. If a strong organization like the United Mine 
Workers or the Brewery, Flour, Cereal, and Soft Drink Workers 
has demanded that it be allowed to organize all workers in the 
industry, the Federation has yielded to the pressure. The au¬ 
thority of the Federation officials is not great. A highly centralized 
organization like the Knights of Labor can exert political influence 
more effectively than a decentralized federation of trade unions. 
With few exceptions, the Federation has refrained from partizan 
political activity. It has not manifested much interest in the 
cooperative movement. An industrial union or such an organiza¬ 
tion as the Knights of Labor, including many different kinds of 
craftsmen, is structurally well qualified to start cooperative enter¬ 
prises; but a weak federation of labor organizations is not. 

In principle, the Knights of Labor opposed the use of the strike 
and favored the resort to arbitration. In 1880 it was officially 
declared that “ strikes are as a rule productive of more injury than 
benefit to the working people, consequently all attempts to foment 
strikes will be discouraged.” But as the order grew, resorts to 
strike became frequent. In that organization, centrally controlled, 
a strike could be enlarged into a general strike of all of the employees 
of a given establishment, or of a certain district. On the other hand, 
the American Federation has consistently maintained that the 
strike, the boycott, and the unfair list are legitimate and necessary 
weapons of organized labor; but being only an advisory body, 
positive and direct action cannot emanate from it. Strikes may 
be ordered by one trade against a given employer, and other 
craftsmen affiliated with the strikers through the Federation may 
continue to work for the same employer. 


THE AMERICAN FEDERATION OF LABOR 


109 


ANTAGONISM BETWEEN THE KNIGHTS OF LABOR AND 
THE AMERICAN FEDERATION OF LABOR 

The American Federation was organized by national unions 
afraid of the growing power of a centralized mass labor organization 
which, while it did not ignore craft lines, placed little stress upon 
such demarcations. Presently, a bitter struggle arose between 
these two organizations representing very different methods and 
ideals in the organization of labor. By 1893, the craft unions had 
won the conflict; the sun of mass and uplift unionism as represented 
by the Knights of Labor was rapidly sinking below the horizon. 
The chief causes of antagonism between these two great organiza¬ 
tions of labor were (1) the lack of sympathy between skilled crafts¬ 
men and common laborers; (2) disputes as to jurisdiction over 
certain kinds of work; and (3) the struggle between the leaders 
in the two organizations for power and prestige. 

THE EXTENT OF UNIONISM IN THE UNITED STATES 

The membership of American unions includes only a small 
fraction of all of the wage workers of the nation. Only about one 
in every six belongs to a union. A much smaller percentage of the 
total number of American wage workers belong than are affiliated 
in several of the European nations, and especially in Australia and 
New Zealand. In the United States, unionism is fairly strong in 
the building trades, railway transportation service, certain parts 
of the clothing industry, and in a few other lines of skilled service. 
American unionism is weak, or non-existent, in steel, oil, textiles, 
food, automobile, metal trades, rubber, and retail service. Until 
recently, little attention has been paid to organizing the workers 
of the South. With increasing industrial activity in that section, 
an opportunity will be afforded to organize a considerable number 
of workers. Efforts to attract women workers and youthful work¬ 
ers into American labor organizations have as a rule been half¬ 
hearted. On the other hand, about one and three-fourths million 
workers were included (1929) in employee representation plans. 
Labor was doubtless more docile in 1929 than it was in 1919. 
Radical movements have been weakened; however, the unem¬ 
ployment of 1930-1932 may put new life and vigor into American 
radicalism. 


no 


LABOR PROBLEMS 


In the last decade, unions have been relatively important in the 
building trades and in the transportation industry. Transpor¬ 
tation is a key industry in which methods of conciliation and 
arbitration have been forced to the front. In the building trades, 
handicraft methods are as yet dominant, employers are relatively 
small-scale, and competition is chiefly local. In both railway trans¬ 
portation and the building trades, competitive conditions are very 
different from those prevailing in manufacturing, mining, and 
merchandising. In the manufacturing industries, with the excep¬ 
tion of the printing and the clothing industries, the decline in union 
membership has been considerable. These two industries still 
retain important elements of craftsmanship. In these two lines of 
endeavor, the use of machinery and the growth of business consoli¬ 
dation have lagged far behind such industries as the automotive, 
rubber, iron and steel, and textile industries. 

WHITHER AMERICAN UNIONISM? 

The American labor movement appears to be weak in the three 
ways in which a labor movement ordinarily expresses itself — 
organization, political activity, and consumers’ cooperation. Why 
is unionism in the United States weaker than in Australia, New 
Zealand, England, or Germany? The pessimistic observer is in¬ 
clined toward the notion that the American Federation of Labor 
is in a state of futility. Why did American unionism mark time 
instead of increasing in membership, power, or prestige from 1922 
to 1930? Has orthodox unionism in the United States gone to 
seed? Why is unionism practically non-existent in certain of the 
large integrated industries? The labor problem is in reality a 
complex of questions, and no simple, single answer need be antici¬ 
pated to the questions propounded above. Social inertia within 
the American labor movement may account in part for the lack 
of resiliency manifested in 1921 to 1929. The technique of organ¬ 
ization has not greatly changed or improved in recent years. Old 
and familiar programs are adhered to. In these days of skillful 
advertising, high-powered salesmanship, and well-organized propa¬ 
ganda new methods on the part of labor organizers may be neces¬ 
sary in order to meet the competition of other movements and of 
the distractions of life. Machine politics and the control by leaders 


THE AMERICAN FEDERATION OF LABOR 


hi 


out of touch with the rank and file may play important roles in 
retarding the growth of certain labor organizations. The failure 
to discard the craft form of organization in old industries, or in 
new ones, in which the machine has rendered the old craft lines 
obsolete and meaningless, is another item which should not be 
overlooked. 

In the years immediately preceding the depression which began 
in 1929, certain new elements in industrial relationships were 
pushed into the foreground. Labor organizations crystallized under 
the older individualistic and militant order were faced with strange 
situations. How far the depression will skew the tendencies easily 
discernible before its advent, is, at the present time (August, 1932) 
not clear; but the period of recovery will probably see the resusci¬ 
tation of numerous activities and interests which were prominent 
in the pre-depression days. Many of the lessons of the depression, 
it is probable, will be forgotten soon after the nation enters upon 
another era of prosperity and optimism. The future of unionism 
depends largely upon the ability of labor organizations to adjust 
to meet new situations; and unions, not unlike other organiza¬ 
tions and institutions, are prone to accept their habitual methods 
and ideals as desirable in any situation. However, the shock of 
the severe depression has caused the rank and file to question the 
efficacy of the orthodox programs of business unionism — witness 
the about-face of the American Federation of Labor, between 
October 1, 1931 and July, 1932, in regard to unemployment in¬ 
surance. If the seven tendencies outlined below are properly 
diagnosed, if they continue to develop as the nation emerges from 
the depression, the orthodox type of militant business unionism 
appears to be doomed to impotency unless it can slough off its 
craft form and turn with more confidence to the conference table 
for guidance. 

(1) The fashionable type of mergers has been evolving a new sort 
of competition. Well-established industries have been reaching 
into new lines. Mining companies have been absorbing manu¬ 
facturing plants. Manufacturing companies have been acquiring 
mercantile establishments on the one hand and mines on the other. 
Integration or vertical combination has been taking place on an 
unprecedented scale. Competition is between large aggregations 
of capital reaching into many fields and operating on various 


112 


LABOR PROBLEMS 


industrial levels — from the primary or extractive industries to 
retailing. Competition between complex industries or groupings 
of industries rather than between individuals or firms engaged in 
one line of business, is growing in significance. 

The non-specialized business man of years ago is coming back, 
however, with a national instead of a local organization and busi¬ 
ness. How will this new set-up affect labor unions? Will it tend 
to develop an organized group or groups within each of these large 
integrated industries? If so, will it tend to destroy the older ortho¬ 
dox type of labor organization which reached across the boundaries 
of separate industries? Is the development of employee represen¬ 
tation or of shop committees within a particular industry a fore¬ 
shadowing of coming events? Will this movement unite men, 
management, and investors into a group in opposition to men, 
management, and investors in competing business aggregations? 
Are we to witness a new form of feudalism in which loyalty to the 
corporation, to the business, takes precedence over loyalty to the 
union or to other associations? Is a return toward certain phases 
of medievalism just ahead? Will loyalty to feudal lord be replaced 
by loyalty to corporation? 

As the United States is beginning to emerge from the depression, 
certain advantages are seen to cling to small-scale and readily 
adaptable businesses. It seems clear that bigness and business 
statesmanship do not always go hand in hand. The consolidation 
movement may be near its peak. The future of American labor 
organizations may be largely determined by the future trend of 
the consolidation movement. 

(2) The use of employee representation by a considerable num¬ 
ber of firms and the installation of personnel departments point 
toward a new relationship between management and men. The 
traditional notion that the only way to maintain discipline and 
obtain results was to put “the fear of God” in the hearts of workers 
by harsh methods and the vision of a group assembling outside 
the factory gates each morning looking for jobs, was being dis¬ 
placed, before the shock of the depression, by the more scientific 
and humane view that workers should know what it is all about, 
should work under good conditions, and should be interested in 
their jobs. The American labor organization came into being under 
the older dispensation before management began to look with favor 


THE AMERICAN FEDERATION OF LABOR 


“3 

upon reasonably high wages, a short working day or week, and an 
attractive shop environment — the traditional demands of organ¬ 
ized labor. 

(3) The practice of selling stock to employees has helped in 
certain cases to give an insight into business conditions and to 
develop a feeling of partnership in the business. Employee- 
stockholders usually are interested in the welfare and growth of 
the organization of which they constitute a part — even though 
it be a small part. Profit sharing may accomplish a similar result. 
Business vicissitudes which the worker does not understand or 
foresee may reduce dividends and profits so that the worker may 
feel that he has been tricked by his employers. Illwill instead of 
goodwill may be generated when stock-ownership or profit sharing 
runs into business storms. The employee owning good dividend¬ 
paying stock in the concern by which he is employed is not likely 
urgently to feel the need of union support. 

(4) The increasing use of piece wage, bonus, or other incentive 
wage payment plans places in fairly clear perspective the relation 
between effort and efficiency, and results. While collective bar¬ 
gaining may be used in determining incentive wage rates and 
premiums, the function of the union in maintaining high wages is 
less evident than are the attitude and skill of the individual worker. 
Incentive wage plans tend to weaken the solidarity of labor and 
to keep alive the feeling of individual independence. 

(5) Mass production is literally production for the masses. 
Poorly paid workers cannot purchase the standardized output of 
large-scale industries. The wage workers of the nation are now 
recognized as important customers with large aggregate purchasing 
power. A general program of wage cutting spells reduced purchas¬ 
ing power for the necessities and comforts produced by big business 
and sold to the wage worker and his family. Henry Ford and 
others have also emphasized the revolutionary idea that high wages 
and low costs may go hand in hand under good management. 
To cut wages has been the traditional first step in case of a reduction 
of prices or profits. Only recently is the idea gaining ground that 
low wages may mean dear wages, and that low-paid and dis¬ 
gruntled workers may be high-cost workers. Friction between 
employer and employee has been a major cause of the development 
of militant labor organizations. This theory of high wages was 


LABOR PROBLEMS 


114 

an unforeseen by-product of mass production in pre-depression 
days. 

(6) Recently, a number of encouraging examples of teamwork 
between labor organizations and employing corporations have been 
called to the attention of the public. The cooperative program 
between the Baltimore and Ohio Railway and several unions among 
the workers in the railway shops is well-known. This plan is not 
primarily a scheme to settle grievances; it is a program arranged 
by mutual agreement for regularization, for improvement of effi¬ 
ciency, and for a consequent increase in wages and in steadiness of 
work. The Canadian National Railway and two or three other 
railway systems have adopted similar plans. The Naumkeag 
Steam Cotton Corporation of Salem, Massachusetts, has adopted 
a teamwork plan which is working satisfactorily. The United 
Textile Workers is recognized and taken into the confidence of the 
management. It is cooperating in initiating constructive policies 
for the reduction of costs. An industrial engineer was agreed upon 
and has undertaken the task of joint research into methods of re¬ 
ducing waste and improving working conditions. And these are 
not isolated examples. Unions and employers adopting such plans 
must orientate their point of view. They must be ready to go into 
conference rather than to prepare for industrial warfare. 1 

(7) The annual flood of immigration which was deposited upon 
our shores between 1900 and 1914 was greatly reduced during 
the World War and later by legislation. The birth-rate is also 
decreasing. The rate of increase of population in the United States 
from 1920 to 1930 was approximately sixteen per cent; but the 
rate is being retarded. From 1930 to 1940 the increase is not likely 
to be more than 10 or 12 per cent. As a consequence, the United 
States is entering an epoch in which the number of old persons will 
be abnormally large in comparison with the situation which has 
hitherto prevailed. The declining birth-rate and the restriction 
of immigration, unless offset by rapid technological improvements 
which displace labor, will tend to strengthen the position of the 
wage-earning group. Relative scarcity of labor power is a factor 
in improving the bargaining position of the workers as a group. 
To scarce factors in production is also ascribed considerable pro- 

1 These plans will be considered in greater detail in the chapter on Industrial 
Peace. The Naumkeag experiment ended in 1932. 


THE AMERICAN FEDERATION OF LABOR 


115 

ductive capacity. This improvement in the status of the individual 
worker will make him more independent and less likely to look 
kindly upon union activities. The reduction in the percentage of 
foreign born may tend to reduce the friction in the ranks of labor 
due to national differences; and, in turn, tend toward solidarity 
within the group. The restriction of immigration releases forces 
which tend to strengthen organized labor; but it also releases 
others which act in a very different manner. It is not easy to 
decide which will be the stronger forces or tendencies. 

As the older form of unionism weakens under the stress of these 
new forces, the future of labor organizations depends in no small 
degree upon the management and the investing interests in indus¬ 
try. If they take advantage of the situation to put the screws 
upon labor, if they attempt to crush unions instead of working 
with them, a more radical group which bears the stamp of Moscow 
may arise out of the confusion. On the contrary, if the employing 
group is willing to recognize, bargain, and do teamwork with 
organized labor, the militant union may be transformed into one 
willing to increase output and to send its leaders into conference 
with the management. American unionism may be standing at 
the cross-roads. It may either be in the painful process of adjust¬ 
ment to a new situation in which the antagonism between union 
and management will be notably reduced, or it may be on the road 
toward capture by the revolutionists. Let industrial managers 
beware. 

The growth of American unionism also depends upon the ability 
of unionists and their leaders to adjust the structure and goals of 
associations of working people to square with new industrial con¬ 
ditions. A few practical considerations may be suggested. (1) Since 
the number of women in industry has increased greatly in the last 
two decades, American labor organizations should adopt a more 
friendly attitude toward the wage-earning woman. The low-paid, 
non-union female wage earner is a constant menace to the higher- 
paid unionist. Since women are more highly individualistic and 
less accustomed to group activities than men, the obstacles in the 
path of the organizer are not inconsiderable. (2) A large number of 
young workers are not being reached by American unions. The old 
organizing methods and the middle-aged organizer have not been 
notably successful with the young wage worker. In order to reach 


n6 


LABOR PROBLEMS 


this active group, more attention evidently must be given to the 
demands, psychology, and ambitions of the youthful worker. 
(3) Up to date, organization of the workers in the new industrial 
South has lagged. Spasmodic efforts, instead of a steady persistent 
drive, have characterized the attempts to organize the Southern 
workers. (4) The neglect of the Negro workers who are rapidly 
entering industry also introduces an element of weakness into the 
structure of American unionism. (5) Business unionism with its 
emphasis upon step-by-step policies is almost devoid of idealism. 
Practical opportunism does not inspire men and women, especially 
the youth of the. land, to rally around a common standard with zeal 
and enthusiasm. Opportunism presents no attractive vision of 
lofty aspirations. Except in times of depression, it offers only a 
weak appeal to the emotions. The depression may serve to furnish 
American unionism with an inspiring objective. 


TRADE UNIONISM VERSUS INDUSTRIAL UNIONISM 

The form of organization of a union and the technique of industry 
are interrelated. The craft form is primarily the product of the 
period before the machine became a prime factor in industry. 
It represents a stratification of the labor movement. Having once 
organized in a particular manner, having formulated a constitu¬ 
tion and by-laws, and its jurisdictional claims, the structure can 
be deformed only after considerable technical changes have taken 
place in the industry. Social inertia Is a significant factor. In 
recent years, industrial technique has changed so rapidly that 
changes in union structure have lagged far behind. As the skilled 
workers see their trade position menaced by the machine, scientific 
management, and the green hand, and as they find it difficult single- 
handedly to win strikes or to make advantageous wage bargains, 
it may be anticipated that craft unionism with its emphasis upon 
trade demarcations will give way to a broader and more inclusive 
form of organization — industrial or an amalgamation of similar 
types of workers. 

The future of American unionism also depends upon the flexi¬ 
bility of existing labor organizations. Will it be possible for trade 
unions to pass beyond amalgamation into industrial unionism as 
industrial units grow larger and as skilled trades continue to be 


THE AMERICAN FEDERATION OF LABOR 117 

invaded by the machine? Will trade unions be willing to waive 
their jurisdictional rights and allow industries such as the auto¬ 
motive and the iron and steel to be organized by industry rather 
than by craft? There are many difficulties in the way; but time 
and the constant wearing away of trade demarcations may eventu¬ 
ally lead to such a consummation. What are some of the diffi¬ 
culties in the path of industrial unionism? 

The craft organization within the American Federation of Labor 
may constitute an actual barrier to the more complete organization 
of American wage workers. The particular interests and funds of 
craft unions, and the personal ambitions of the officers of such 
organizations are factors in delaying amalgamation or transforma¬ 
tion into industrial unions. The trade unions are composed in a 
large measure of skilled men of the older immigration; the industrial 
union contains many unskilled workers who are of the more recent 
immigration. The skilled, of course, dominate the trade unions; 
but they might be outvoted in an industrial union. 

Other forces unfavorable to the growth of industrial unionism, 
which are more positive and which partake less of mere inertia or 
of group distrust, may also be indicated. Wage workers do not 
constitute an impersonal mass of individuals; each one has his 
own desires, loves, hatreds, and experiences. The “wish for 
worth” which clings to each human indicates that organizations 
of labor must continue to stress the importance of the individual. 
This militates against the development of an extreme form of 
industrial unionism in which individual skills and abilities are 
conceded to be insignificant. 

Again, if the machine age is carried to its natural ending, drudgery 
and mere routine machine tending or feeding will be eliminated, 
and the trend toward industrial unionism may be checked. Finally, 
under peaceful and fairly prosperous conditions an industrial union 
is likely to have its solidarity weakened. Differences of interest 
appear among the various types of workers, skilled, semi-skilled, 
and unskilled, aggregated into one union. 

Trade autonomy and industrial autonomy are essentially an¬ 
tagonistic; but industrial unionism and trade unionism are not 
necessarily so. Industrial and trade unions might exist side by 
side, and for complete and effective organization both may be 
desirable. For example, the United Mine Workers controls all 


n8 


LABOR PROBLEMS 


mine workers; but stationary engineers working in coal mines 
ought also for their own protection to belong to the trade union of 
engineers. At least two reasons may be advanced in support of 
this contention, (i) An engineer belonging to a trade union may 
readily pass from the coal mining industry to some other. He is 
still a member of his trade union and may transfer from industry 
to industry as the labor market may indicate. If he is only an 
industrial unionist, he cannot readily seek work outside the coal 
mining industry. (2) In the event of a strike in the mining industry 
union engineers, or other trade unionists, will not take the place 
of those on a strike who belong to the same trade union. The 
building trades councils in various cities preserve trade organiza¬ 
tions, but affiliate together somewhat like an industrial group. 

REFERENCES 

Carlton, F. T., Organized Labor in American History, Chaps. 9-11 

Catlin, W. B., The Labor Problem, pp. 283-294 

Gluck, E., John Mitchell 

Gompers, S., Seventy Years of Life and Labor 

Hardman, J. B. S., American Labor Dynamics, Part 1 

Reed, L. S., The Labor Philosophy of Samuel Gompers 

Ware, N. J., The Labor Movement, 1860-1895, Chaps. 9-12 

Wolman, L., The Growth of American Trade Unions 


CHAPTER VII 


THE MIGRATORY WORKER AND 
RADICAL GROUPS 

THE MIGRATORY WORKER 

Before the depression of 1929-1932, there were probably between 
one and a half to two millions of Americans who might fairly be 
classed as migratory. In 1930, over 700,000 farm laborers were 
recruited by the United States Employment Service and “ directed 
to employment in cotton, wheat, berries, fruits, vegetables, po¬ 
tatoes, corn, sugar beets, hay, and many other important crops.” 
The depression is doubtless adding to this great host of drifters. 
During the months of October and November, 1931, it was esti¬ 
mated that 1,200 “homeless and penniless men and boys” were 
daily coming in to California. 1 In the summer of 1932, a host of 
youthful hitch-hikers and tramps were on the highways of the na¬ 
tion. The migratory workers may be divided into two classes: the 
hobo and the tramp. The hobo is the true migratory worker. He 
is a restless toiler who does not remain long on a particular job. 
The tramp wishes to avoid work; but on occasions he will labor for 
a short time. In the hunting and fishing stage, the entire popula¬ 
tion was migratory and in the pastoral stage practically all were 
migrants. The early Hebrew tribes were the migrants of the 
desert. History records many mass movements of population. 
The racial background of modern people tends to produce migra¬ 
tory individuals. This crops out in spring fever, the desire to hunt, 
fish, wander, etc. The process of domesticating man to a fixed 
habitation, to a specialized or routine regular job, has been a long 
and painful process. The clock and regularity are new items in 
the life of the human race. By inheritance all of us are prone to 
travel irregularly, to wander, to be migrants, to travel. But train¬ 
ing, the pressure of public opinion, and the necessity for earning a 

1 The Survey , June 1, 1932; Labor , June 28, 1932; American Federationist, 

July, 1932. 


120 


LABOR PROBLEMS 


living, tie most of us to regular jobs. Many of us fail to understand 
the wanderer but many secretly admire and envy him. The Ford 
and the second-hand car are being used by migratory families. 

Many of our basic industries demand migratory workers — 
agriculture, lumbering, and construction work. The Bureau of 
Labor Statistics estimated in 1928 that Kansas and North Dakota 
each required about 20,000 harvest hands from outside the state. 
The use of the combine is rapidly reducing the need for extra 
harvest hands in the wheat fields. In the picturesque language of 
another, the combine “goes around a field, cuts the wheat, thrashes 
it, throws away the straw, and drops sacks of wheat on a truck, and 
the harvest hand has followed the Indian, the buffalo, and the 
ichthyosaurus into the history of the wheat plains.” 1 If the 
harvest hand has gone to town to look for a job, he has not found 
one. A successful mechanical cotton picker will lead to revolu¬ 
tionary changes in the Cotton Belt; but an increased demand for 
seasonal help may be expected from the fruit-growing sections of 
the nation. Under present conditions, we continue to find seasonal 
jobs for the migratory worker. He is mistreated, fleeced, jailed, 
and ostracized; but he is needed in many sections of the nation. 
Judged by middle-class standards, the migrant is not a normal 
person. He is unblessed by the ties which today make the warp 
and woof of orderly society. American institutions were fashioned 
for the traditionally middle-class. The drifting and homeless 
worker does not fit into the scheme of things. The migratory 
workers are propertyless, homeless, voteless, drifting, despised 
persons. They possess no stake in life; they hold no property to 
make them cautious and conservative, they are without a cause 
or a country. The ethics of the migrant are simple. Life comes 
first. The migratory workers are not in touch with the complex 
forms of industry. A friend of the hobo insists that “ there is always 
something wrong with a man who does not become a hobo. If a 
man is content to grow up, marry, work, grow old, and die in the 
same town where he was born, he is a congenital idiot.” The 
middle-class property owner and the restless hobo have little in 
common. It is exceedingly difficult for one to understand the point 
of view of the other. 

The odd-jobber is the first cousin of the hobo. The odd-jobber 
1 Smith, J. R., The Survey , June 1, 1931, p. 334. 


THE MIGRATORY WORKER AND RADICAL GROUPS 121 


drifts from job to job but stays in the same town or locality. This 
unfortunate beats rugs, mows lawns, shovels coal, unloads or loads 
material, handles concrete, spades gardens, and shovels snow. 
From time to time certain manufacturing plants employ the odd- 
jobber. Nearly all of this type of workers are men over fifty years 
of age who have lost their former steady jobs. When not working, 
the odd-jobber is found on the streets, in the parks, or in cheap or 
municipal lodging houses. 

THE INDUSTRIAL WORKERS OF THE WORLD 

This is an ultra-radical labor organization; it represents the 
American syndicalist group. Its ambitious aim is to unite all of 
the workers of the nation into an industrial union committed to 
bitter opposition to the present industrial and political order. Its 
problem is to organize “one big union” by means of which the 
workers may be able simultaneously and repeatedly to cease work¬ 
ing in one, several, or even all industries. The leaders of this 
aggressive, militant organization declare that unions grouped ac¬ 
cording to trades cannot cope successfully with large organizations 
of capital. The American Federation of Labor accepts the present 
industrial order and is trying to make good wage bargains with 
employers; the Industrial Workers of the World vehemently de¬ 
mands the abolition of the wage system and the elimination of the 
employer. This organization was formed in 1905. Soon after its 
formation, a bitter factional fight occurred, as a consequence of 
which another organization was brought into being. The constitu¬ 
tion was changed so as to make it clear that the I.W.W. carried on 
its struggle against the existing order only on the industrial field; 
political action was repudiated. In August, 1910, the secretary- 
treasurer stated that the paid-up membership was 5,863. The 
financial resources were inconsiderable. “Our policy,” wrote the 
secretary, “is not to have any as far as that is concerned, as we do 
not ever intend to have a treasury built up that will be an invitation 
for the employing class to confiscate.” In January, 1917, the 
paid-up membership was said to have been 60,000; and an aggre¬ 
gate of 300,000 membership cards had been issued since 1905. 1 
In 1929 the Bureau of Labor Statistics reported its membership 
to be 30,000. In the nineteenth convention of the organization, 

1 Brissenden, P. F., The I. W. W., p. 339. 


122 


LABOR PROBLEMS 


held in 1931, only seven official delegates were present. The 
membership of the Industrial Workers of the World has never been 
stable; few of the type of men who are attracted into the organiza¬ 
tion are able or willing to pay dues. However, its strength cannot 
be accurately measured by dues-paying membership or by the 
resources in its treasury. In 1932 this organization of highly 
individualistic men appeared to be approaching its dissolution. 

The Workers’ International Industrial Union, at one time known 
as the Detroit I.W.W., grew out of one of the early factional fights 
in the organization. The members of this group were closely con¬ 
nected with the Socialist Labor Party. Like the Industrial Workers 
of the World, the members of this organization believed that “ the 
working class and the employing class have nothing in common”; 
but they favored the organization of toilers on the political as well 
as on the industrial field. They fight on both fronts. The Work¬ 
ers’ International Industrial Union did not countenance violence. 
Its membership was always small. At the convention in 1924 
only seven delegates appeared and the organization soon went out 
of existence. Theoretically, the Industrial Workers of the World 
is a highly centralized organization; but its membership has been 
composed of highly individualistic men who are difficult to direct 
and control. It has suffered from repeated factional struggles. As 
its name indicates, the industrial form of organization was adopted. 
Craft lines were obliterated. In one industry, the I.W.W. planned 
to group all workers of a given unit — machinists, molders, wood 
workers, and common laborers — into one industrial union. These 
industrial unions were to be united into departments subordinated 
to the general organization in which all workers in a given industry 
were to be included. In 1931 seven sub-groups or departments 
existed, at least in skeleton form — agricultural workers, coal 
miners, general construction workers, building construction work¬ 
ers, marine transport workers, lumber workers, and a general re¬ 
cruiting union. 

The advocates of industrial unionism point out that the com¬ 
prehensive plan proposed by the Industrial Workers of the World 
corresponds to the facts of modern industry. Craft unionism was 
adapted to small-scale industry in the days preceding concentration 
and integration in industry; but is obsolete at the present time. 
The employing corporation today controls a variety of workers of 


THE MIGRATORY WORKER AND RADICAL GROUPS 123 

various crafts, skilled and unskilled. Labor organizations, the 
argument runs, must likewise include in one compact union all 
the skilled and unskilled workers employed by that corporation. 
In the case of a labor dispute, an industrial union could paralyze a 
given industry. All workers could be simultaneously called out. 
The members of the Industrial Workers of the World care little 
about recognition of the union; they object to signing wage con¬ 
tracts with their employers which will in any way interfere with the 
sympathetic strike or with the right to strike at an opportune mo¬ 
ment; and they emphasize the idea of the solidarity of all wage 
earners. 

In a chart of reform organizations the Industrial Workers of the 
World appears at the extreme individualist end while another ultra¬ 
radical movement is placed at the collectivist end of the graph. 1 
The Industrial Workers of the World does not believe in representa¬ 
tive government or any other form of political association; it 
holds that “democracy is a social superfluity.” The Industrial 
Workers of the World and the Communists are not adverse to the 
use of violence to accomplish their ends. According to the syndical¬ 
ist, progress comes through revolution or catastrophe. Socialists 
believe in the ballot box and do not approve of violence except as 
a last resort. On the other hand, the I.W.W. leaders would “strike 
at the ballot box with an ax.” Under the pressure of measures 
taken during and immediately after the World War to suppress the 
Industrial Workers of the World, the 1920 Convention declared 
that the organization “does not now and never has believed in or 
advocated either destruction or violence as a means of accomplish¬ 
ing industrial reform.” 2 This appears to be a definite reversal of 
policy. The Industrial Workers of the World were ready, according 
to Vincent St. John, in 1911, “to use any and all tactics that will 
get the results sought.” 3 After 1920, the ultra-radicals began 
going into the Communist movement, and the Industrial Workers 
of the World became a slowly dying organization. 

It is very difficult for the average American to discuss calmly and 
fairly the theory of Communism or of I.W.W.-ism. And it is still 
more difficult for the majority of middle-class Americans to under¬ 
stand or even to try to get the point of view of ultra-radicals who 

1 Carlton, F. T., Economics , p. 349 - 3 The w • w -> P- T 7 (pamphlet). 

2 Bimba, A., History of the American Working Class, p. 307. 


124 


LABOR PROBLEMS 


scoff at practically everything that the former cherishes. The 
restless and bitter member of the Industrial Workers of the World 
is almost the opposite in personal characteristics of the complacent 
middle-class American; they have little in common. The basic 
idea in the doctrine of the revolutionary groups we are studying is 
that of a bitter class struggle. To the syndicalist, the class struggle 
is a necessary and a creative force. It tends, according to the 
revolutionist, to solidify and strengthen the masses for the eventual 
battle which is to overthrow completely the present social order. 
After the social revolution the problem of the syndicalist is that of 
eliminating all classes except the proletariat. All are to be leveled 
into one great class, controlled apparently by the syndicalist lead¬ 
ers, by the revolutionary elect. Like other radicals, the leader of 
the Industrial Workers of the World has been perfervid in expres¬ 
sion but has neglected to work out a constructive program. The 
syndicalist as well as the anarchist appears to be looking backwards 
toward a simple integrated or non-independent society for his ideals 
of government. 

I.W.W.-ism and Communism strike hard at all that the middle- 
class considers sacred or desirable. The ultra-radical wishes his 
movement to be purely working-class. In Russia the Communist 
movement has flourished among the industrial workers of the cities. 
The American Industrial Workers of the World is composed largely 
of the unskilled and migratory, or drifting, workers. The workshop 
group is to replace political parties. Patriotism is frowned upon; 
it is held to be a middle-class virtue, and therefore bad. “The 
workingman’s country is where he finds work.” Economic interest 
is the only tie, according to the revolutionists of the type we are 
studying, which can firmly bind men together. All other ties, such 
as nationality or race, are illusions fostered by the despised middle 
class. 

Property rights are sneered at as inventions of the middle class. 
A former prominent member of the Industrial Workers of the World 
has clearly presented their point of view: “ Why should we hesitate 
about destroying property? It is not ours. Instead, the employer 
uses it to our disadvantage whenever he can. Furthermore, he 
isn’t careful about our property, our physical and mental power, 
the only property we have. He sends us into the mines as children 
without a semblance of an education, speeds us up, underpays us, 


THE MIGRATORY WORKER AND RADICAL GROUPS 125 

wears out our bodies, and then, without a thought for our well¬ 
being, throws us on the scrap heap or abandons us to the poor- 
house when we are no longer useful.” 

Americans have complacently asserted that the middle class 
throughout our history has constituted the backbone of American 
society. The average citizen has felt that the ideals of America 
are those fostered by the great middle class. The following quota¬ 
tions from one of the intellectuals among American revolutionists 
may come as a distinct shock to some. Certainly, here is disclosed 
a point of view which is very, very different from that so often 
expressed by well-known Americans living and dead: “The middle 
class is a natural-born palterer. Fearful of going wrong, it doesn’t 
go. . . . The middle class mind makes for mediocrity. Let this 
pestilence gain entrance in a nation, it is all up with the people. 
To be comfortable becomes for them life’s be-all and end-all. . . . 
They settle into gregarious nonentity — ciphers, blanks, negatives. 
Trimmers, who run with the hare and hunt with the hounds and 
are blotted into one mass of indistinction. . . . The middle class 
is a ‘betwixt and betweener.’ It is always on the fence. The 
effect of middle-classism is seen ‘ in narcotizing the soul and putting 
heroism to sleep.’” 1 This is not pleasant reading for those of us 
who claim to be members of the middle class. 

The revolutionist believes that his ideal makes a fine appeal to 
the heroic and altruistic in man. “Man is not so exhausted as to 
act reasonably.” Progress comes in the “clash of irreconcilables.” 
The militant in man is appealed to; compromise is scouted as the 
policy of the weakling and the mollycoddle. Society is to be altered 
and regenerated by a fierce struggle. And after the smoke of the 
social revolution has cleared away, apparently a utopia of some 
not well-defined sort is to be anticipated. But Russia is far from 
being a utopia under the regime of the Communists. As a conse¬ 
quence of the emphasis upon the militant in life, the class struggle 
and the general strike are looked upon with favor. Any measure 
which will stimulate class antipathy, which will aid in giving the 
workers a vision of working-class solidarity, will help in carrying 
out the “great and sublime mission of renovating the world.” A 
strike is considered to be a means of harassing the employing class 
and of giving solidarity to the workers. According to the syndi- 
1 White, B., The Carpenter and the Rich Man, Chap. 8. 


126 


LABOR PROBLEMS 


calist, there should be no careful middle-class-like weighing of the 
consequence of a strike. It should come as a hot outburst of pas¬ 
sion. A strike should spell sacrifice in a common cause; out of 
sacrifice grow working-class unity and enthusiasm. 

The following statement clearly presents in a few words the 
theory of the syndicalist: “The syndicalist is to prepare for a new 
world in which he, the producer, will have the upper hand, and the 
other class, overcome by means of the general strike, will be forced 
to capitulate. In that new world there will be no authority either 
of the State or of masters. All work will be looked upon of one 
value; property will be abolished; men will be associated in small 
federated groups.” 1 One of the former leaders of the Industrial 
Workers of the World painted this picture of that militant body: 
“One great organization — big enough to take in the black man; 
big enough to obliterate national boundaries, and one which will 
become the great industrial force of the working class of the world.” 
Society, the old-line trade union, and too often the church, have 
forgotten the common man, the unblessed, the workers at the 
bottom of the heap. The I.W.W. appeals to such because of the 
emphasis upon brotherhood. Its leaders skillfully connect the gen¬ 
eral strike and industrial chaos “with the overarching thought of 
a world brotherhood.” 


THE COMMUNIST 

In 1919, two groups of left-wing or radical Socialists left the 
Socialist Party and organized the Communist Labor Party. These 
two factions were united in 1921 under the name of the Communist 
Party of America, later called the Workers’ Party of America. In 
the Presidential election of 1924, the Workers’ Party polled over 
33,000 votes; in 1928 the vote was approximately 48,000, about 
23 per cent of which was polled in the state of New York. The 
vote in the election of 1930 registered a large increase over 1928. 2 

The Workers’ Party is a part of a world-wide Communist move¬ 
ment dominated in a large measure by Russian influence. The 
1928 platform of the party expresses contempt not only for the two 
major political parties but for the American Federation of Labor, 
the Progressives, and the Socialists. These statements are selected 

1 Lewis, A. D., Syndicalism and the General Strike, pp. 11-12. 

2 House Report 2290, Seventy-first Congress, Third Session. 


THE MIGRATORY WORKER AND RADICAL GROUPS 127 

from the platform: “These ‘progressive’ Senators and Congress¬ 
men are in many respects more dangerous enemies of the workers 
and working farmers than the official spokesmen of big business, 
because they hide their capitalist face and create illusions in the 
minds of the masses.” “Under the leadership of the most corrupt 
trade-union bureaucracy in the world the A. F. of L. has become 
mainly an organization of the labor aristocracy, an instrument of 
class collaboration with the bosses instead of a means of struggle 
against big business.” “The Socialist Party of today is for the 
protection of capitalist law and order, is against revolution, is 
against the working-class government of Soviet Russia, and sup¬ 
ports every measure of the A. F. of L. bureaucracy for class collabo¬ 
ration.” 

“The Workers’ (Communist) Party is today the only genuine 
working-class party. It is the sole party which has a program for 
the workers and working farmers. It is the only party which con¬ 
ducts a relentless struggle against capitalism, against the old 
parties of the bosses and against the corrupt labor bureaucracy 
and the treacherous Socialist Party.” The original program of the 
party in regard to labor organizations was that of “boring from 
within,” that is, to gain control of existing labor organizations. 
Recently communist unions have been organized in opposition to 
the old-line unions. The Socialists and the Industrial Workers of 
the World have from time to time made efforts to gain the ad¬ 
herence of the Negro; but little has come of these efforts. The 
Workers’ Party is making a definite bid for the Negroes and for all 
groups oppressed by imperialism or other manifestations of capital¬ 
ism. It is insisted that racial prejudice and discrimination are out¬ 
growths of the present order. This seems to be of doubtful validity 
although there seems to be no instinctive or inborn racial prejudice. 
The Negroes feel that the economic discrimination manifest in get¬ 
ting jobs is especially insisted upon by the rank and file of white 
workers. Certain Negro leaders are of the opinion that the well-to- 
do and the employing group are better friends of the Negro than are 
the white workers — hence the reluctance of the Negro to join labor 
organizations or radical parties. 


128 


LABOR PROBLEMS 


THE SOCIALIST PARTY 

Socialists do not organize labor organizations; their efforts are 
confined to the political field. The Socialist Party was formed as a 
result of a split in 1899 in the Socialist Labor Party. It assumed its 
present name in 1901. In 1912, the Socialists polled nearly six per 
cent of the total vote, but in 1928 the percentage dropped to about 
three-fourths of one per cent. In 1924, the Socialists supported 
the Progressive ticket headed by Senator La Follette. The Socialists 
assert that under the capitalistic system many are exploited in the 
interests of the few. They would have the government take over 
all public utilities and other large industries and operate them in 
the interests of the community. The Socialists do not believe 
in equality of wealth and income but they do stress equality of 
opportunity. They would strengthen rather than weaken the 
functions of government. Socialists do not advocate violence. 
The Socialist Labor Party has never exhibited much strength. 
In 1928 it polled about 21,000 votes. 

REFERENCES 

American Labor Year-Book (various issues) 

Bimba, A., History of the American Working Class 
Brissenden, P. F., The I.W.W. 

Carlton, F. T., Organized Labor in American History, Chap. 8 
Gambs, J. S., The Decline of the I.W.W. 

Tucker, I. St. J., World Tomorrow, Sept., 1923 


CHAPTER VIII 


EMPLOYERS’ ASSOCIATIONS 

WHAT ARE EMPLOYERS’ ASSOCIATIONS? 

Owners of capital have from time to time fostered a variety of 
combinations — corporations, pools, “trusts,” holding corpora¬ 
tions, trade associations. These forms of capitalistic organization 
have developed under the pressure of competition and of opposition 
as measures of self-defense. In many instances, they have attained 
monopoly power and have become inimical to the welfare of other 
groups. The employers’ association is one more form of organiza¬ 
tions of capitalists or of employers. The pool, the trade association, 
or the “trust” is formed to deal with all sorts of technical or 
financial matters — buying, producing, and marketing. The em¬ 
ployers’ association is a combination of business establishments 
evolved for the express purpose of dealing with or fighting labor 
organizations. The employers’ association uses methods similar 
to those used by labor organizations in admitting and rejecting 
members. On occasion, each may resort to the boycott, use spies 
or pickets, attempt to regulate output, or strive to determine wages 
or prices. 

United and concerted efforts on the part of wage workers lead 
to the unification of the employers and vice versa. During the trade 
union activity of the thirties and of the sixties, small and ephemeral 
employers’ associations appeared to oppose the labor organizations. 
Like the labor unions of those decades, the associations of em¬ 
ployers were usually local and not controlled by a strong central 
authority. They were organized only when labor was temporarily 
well organized and aggressive. With the weakening of the union’s 
strength, the bonds which held the competing employers together 
were broken. Strong and permanent employers’ associations come 
into being contemporaneously with national and permanent labor 
organizations. Indeed, an extensive system of collective bargaining 

129 


1 3 ° 


LABOR PROBLEMS 


or of trade agreements presupposes the existence of an organization 
of both employers and of employees. 


TYPES OF EMPLOYERS’ ASSOCIATIONS 

Employers’ associations are of two rather distinct types. One 
class is organized in order to bargain successfully with the organiza¬ 
tions of their employees. This style of association recognizes labor 
organizations to be legitimate and seeks to work more or less in 
harmony with them. The second class is bitterly antagonistic to 
labor organizations. Although usually declaring that they are 
favorable to “legitimate” labor organizations, the members of the 
second class of employers’ associations are actually opposed to the 
practices which the average unionist holds essential to the success 
of organized labor. They favor unions of the weak type which 
do not strenuously strive to shorten the working day or to raise 
wages, that is, they favor a union which does not interfere with large 
profits and which teaches contentment with existing conditions. 
The first type aims to check the abuses and excesses of organized 
labor; the second is hostile to the fundamental principles of union¬ 
ism and wishes to extirpate or emasculate unionism. The trust or 
large corporation does not need to enter an employers’ association; 
it is itself virtually such an association. Our great railway systems 
may be placed in the first class of associations. Certain large 
corporations, many city associations of employers, and a group of 
special trade associations must be classified as “union-smashing” 
associations. 

So long as wages and conditions of labor are fixed by means of a 
bargain between the employers and their employees, a strong union 
should be balanced by a strong employers’ association. A strong 
organization of either employers or employees, if unchecked by 
an opposing organization, will inevitably make unreasonable and 
excessive demands. Opposition purifies a political party, and it 
improves the character of an association of employers or of wage 
workers. Since the first class of associations is formed to treat 
with labor organizations and to check the arrogance of unopposed 
trade unionism, its members consider the employment of labor to 
be a simple business proposition. The first important national 
association of employers was the United States Potters’ Associa- 


EMPLOYERS’ ASSOCIATIONS 


I 3 i 

tion, formed in 1875. The Stove Founders’ National Defence 
Association, now called the Manufacturers’ Protective and Develop¬ 
ment Association, was organized in 1886. The success of this 
association in making formal wage contracts with the employees 
engaged in the stove industry 1 stimulated the formation of other 
comprehensive associations of employers. The National Founders’ 
Association was formed in 1898, the Dock Managers’ Association 
in the same year, and the National Metal Trades’ Association in 
1899. This class of organization was perhaps most prominent in 
the middle of the first decade of this century. In 1905, “in the 
seven great industries of stove and furnace manufacturing, metal 
foundry work, lake transportation, machine construction, publish¬ 
ing and printing, marble cutting, and ready-made clothing manu¬ 
facturing, strong national associations “treated with similarly 
organized unions of employees, and drew up contracts relative to 
the condition of labor in the respective industries.” In addition, 
many localized associations exist such as associations of coal 
operators which treated with the United Mine Workers, and the 
various employers’ associations in the building trades and in the 
clothing industry. 2 Soon after the turn of the century an un¬ 
friendly spirit toward unionism began to be manifest. It has been 
pointed out that an association of employers willing to bargain 
with labor organizations might control an entire industry. As¬ 
sociations of labor and of capital united could raise prices, and 
divide the plunder in the form of higher profits and of higher wages. 

The type of employers’ association hostile to organized labor is 
represented by such national bodies as the National Association of 
Manufacturers, the League for Industrial Rights, and the National 
Metal Trades’ Association; it is represented locally by city associa¬ 
tions of employers such as the Associated Employers of Indianapo¬ 
lis. These anti-union employers’ associations have not only been 
antagonistic to revolutionary unionism, but they have fought 
bitterly against the American Federation of Labor and its affiliated 
unions. This type of employers’ association is against all unions 
which have “teeth.” A parallelism may be discerned between 
labor organizations and employers’ associations. 3 Each has a 

1 See Chapter 13. 2 See Chapter 13. 

3 This is denied by C. E. Bonnett in his book Employers' Associations in the 
United States, p. 17. 


1 3 2 


LABOR PROBLEMS 


defense fund; each controls its members more or less rigidly; each 
employs business agents called walking delegates or commissioners 
or secretaries; each is organized along trade lines into local and 
national bodies; and in each the individual on becoming a member 
must surrender in a large measure his right to determine the 
conditions under which his work as employer or employee will be 
performed. Each emphasizes solidarity of organization and the 
duty of all concerned to join with their associates. The following 
quotation from a publication of an employers’ association illus¬ 
trates the point. “Every desertion from their [employers’ associa¬ 
tion] membership not only weakens the association and the member 
who quits, but it weakens the power of those who remain in the 
association to render service. . . . The employer who does not 
meet his share of the responsibility in maintaining and assisting the 
development of such associations is blind to his duty.” 1 This 
statement almost exactly indicates the feeling of unionists toward 
the non-unionist. The anti-union employers’ associations oppose 
collective bargaining with unions, demand the “open shop,” insist 
upon freedom of contract, object to restriction of output by work¬ 
ers, and condemn the strike and the boycott. The attitude assumed 
is highly individualistic. The leaders of the group overlook the 
changes in relations between individuals which the growth of large 
corporations and of economic independence has forced upon the 
nation. They think in terms of the last quarter of the nineteenth 
century. 

The National Association of Manufacturers was organized in 
1895 for the chief purpose of building up export trade in manu¬ 
factured goods. By 1903 it had become aggressive in its opposition 
to organized labor. In 1903 the President of the Association made 
a bitter attack upon unionism. “Organized labor knows but one 
law and that is the law of physical force — the law of the Huns and 
Vandals, the law of the savage. ... It is, in all essential features, 
a mob power knowing no master except its own will. Its history is 
stained with blood and ruin.” 2 From that time to the present the 
National Association of Manufacturers has insisted that employers 

1 Law and Labor, Oct., 1921. 

2 Proceedings, National Association of Manufacturers, pp. 7-20. Quoted in 
Taylor, A. G., Labor Policies of the National Association of Manufacturers, 
PP- 35 - 36 . 


EMPLOYERS’ ASSOCIATIONS 


133 


should be “unmolested and unhampered in the management of 
their business.” Its attitude and that of other anti-union associa¬ 
tions only echo and re-echo the pronunciamentos of employers’ 
associations of earlier days. In 1864 the Iron Founders’ Associa¬ 
tion of Chicago and vicinity declared in a circular: “But when 
employees seek to enter the sphere of employers and to dictate to 
them in the management of their business, it becomes not only the 
right , but the duty of employers to check and suppress such move¬ 
ments by any lawful means.” The present leaders tell us that 
unions are a menace to American institutions when they insist 
upon the closed shop, or use the “un-American” boycott and that 
organized labor is trampling “in the dust the natural and con¬ 
stitutional rights of our citizens.” The League for Industrial 
Rights, originally the American Anti-Boycott Association, “ limits 
itself mainly to the special field of law and legislation.” The 
National Metal Trades’ Association and the National Founders’ 
Association are examples of employers’ associations in limited fields 
of industrial enterprise. The Associated Employers of Indian¬ 
apolis is an aggressive anti-union local employers’ association. It 
is somewhat analogous to a city federation of labor. 

The National Industrial Conference Board is a loosely united 
federation of trade and employers’ associations, organized in 1916. 
Its work is largely that of research into the field of industrial re¬ 
lations. Reports have been made on changes in the cost of living, 
wages, taxation and public expenditures, and a variety of other 
topics. The National Civic Federation is an important and unique 
private organization devoted to the promotion of industrial peace. 
It was organized in 1901. The avowed object of the Federation 
is to obtain cooperation between employers, employees, and the 
public. These three classes are represented upon the executive 
committee of the organization. It has been favorably inclined 
toward the American Federation of Labor, but it has made bitter 
attacks upon Socialism and upon radical and revolutionary labor 
movements. 


THE LABOR SPY 

The opposition of employers’ associations to unions has made 
possible the growth of organizations or businesses prepared to 
furnish labor spies and strikebreakers. It is difficult to ascertain 


134 


LABOR PROBLEMS 


the extent of this anti-union activity; but establishments have 
existed whose sole business has been to furnish spies and strike¬ 
breakers. One company advertised that it made “a specialty of 
furnishing union and non-union men and women for secret work.” 
Men in good standing in unions have been found to be in the pay 
of organizations providing spies and strikebreakers. Reports are 
regularly made to the management of the plant in regard to unrest 
and the activities of union men. If no trouble exists, it may 
reasonably be anticipated that the spy will help foment unrest and 
strife. “Disturbers of the peace” may be located and quietly 
discharged. The spy system is a distinct menace to the develop¬ 
ment of goodwill and friendly relations between management and 
men; but it is desirable that the management be informed as to 
real and imaginary grievances. It is properly a part of the job of 
an industrial relations or personnel department to work out an 
adequate technique of fact-finding in the realm of industrial rela¬ 
tions. 

It has seemed clear for years to students of the labor situation 
that two groups of bitterly hostile and militant organizations do 
not make for industrial goodwill or efficiency. The employer or 
association of employers, willing to make an honest attempt to 
work with groups of employees bound together in unions or in 
virile shop committees, is following a constructive policy. Effi¬ 
ciency, goodwill, and mutual respect cannot be obtained by re¬ 
pressive measures, by injunctions, or through autocratic control. 

REFERENCES 

Bonnett, C. E., Employers’ Associations in the United States 
Taylor, A. G., Labor Policies of the National Association of Manu¬ 
facturers 

Howard, S., The Labor Spy 


CHAPTER IX 


POLICIES OF LABOR ORGANIZATIONS 

ADMISSION TO MEMBERSHIP 

As a rule any competent person actually working at his trade 
or occupation may gain entrance to the labor organization in his 
particular trade or industry. The American Federation of Labor 
and certain national unions employ salaried and voluntary organ¬ 
izers. The business of the organizer is to induce non-unionists to 
enter the organization. The organizer emphasizes the benefits 
accruing to members of the union. If persuasion fails, coercive 
measures may be employed. The refusal to work with non-union 
men, or to work upon goods produced by them, may cause non- 
unionists to apply for membership in a labor organization. Many 
obstacles confront the typical labor organizer. Unless he is a 
salaried official of a national union, he is liable to be discharged by 
his employer because of his union activities. The individualism of 
many workers causes them to be reluctant to join a union and be¬ 
come amenable to its discipline. Others object to paying union 
dues. It is often difficult to get the workers’ or the union point of 
view before the public. Many newspapers are either anti-union 
or indifferent toward unionism. Consequently, the pressure of 
public opinion is frequently directed against unionism. In certain 
instances, the efforts of organizers have been checked by the use of 
injunctions. American business unionism with its emphasis upon 
a step-by-step program does not appeal to the idealism of the 
younger workers. 

A union which aims at the determination of minimum wages and 
the reduction of the length of the working day uses tactics similar 
to those employed by a large combination of business units. It 
tries to induce all workers to come into the union fold; but failing 
in that endeavor, it attempts to force the recalcitrant ones out of 
the trade or occupation. In actual practice, certain unions exclude 
women, Negroes, or aliens. Some unions composed of skilled men 

i3S 


LABOR PROBLEMS 


136 

restrict their membership by charging high initiation fees. It is 
not uncommon in the building trades to charge initiation fees equal 
approximately to the wages for one hundred hours of work. High 
initiation fees are justified on the ground that the union has ob¬ 
tained, through united and sacrificial efforts, higher wages and 
better working conditions. Persons joining the union get the 
benefits of the past endeavors of the organization. Consequently 
it is fitting to ask incoming members to pay well for the privilege 
of membership. In some organizations the local union may im¬ 
pose restrictions in addition to those required by the national 
body. Candidates are admitted to membership by the votes of a 
local. 


JURISDICTIONAL DISPUTES 

The recurrence of quarrels “within the family” has been con¬ 
sidered by labor leaders to be “the one dark cloud” on the union 
horizon. Since a trade union is primarily a grouping of craftsmen, 
the drawing of lines clearly marking the boundaries of its jurisdic¬ 
tion becomes of vital importance. Encroachment on its field of 
jurisdiction tends to reduce the jobs available to members and 
ultimately to diminish the membership in the union. And the job 
is of first importance to the wage worker of today. So long as 
workers remain trade or craft conscious and new methods of doing 
work are from time to time introduced, the jurisdictional dispute 
will continue to be a cause for dissension within the ranks of trade 
unionists. In case of a change in the methods of doing work affect¬ 
ing two or more crafts, each craft is eager to enlarge the jurisdic¬ 
tional limits applying to its members. Each national union lays 
claim to certain specific kinds of work or types of workers. The 
United Brotherhood of Carpenters and Joiners claims jurisdiction 
over all branches of the carpenter trade, “all milling, fashioning, 
joining, assembling, erecting, fastening, or dismantling of all ma¬ 
terial of wood, hollow metal, or fiber, or of products composed in 
part of wood, hollow metal, or fiber, the laying of all cork and 
compo, all asphalt shingles, the erecting and dismantling of ma¬ 
chinery and the manufacture of all wood materials where the skill, 
knowledge, and training of a carpenter are required, either through 
the operation of machine or hand tools.” The jurisdictional dis¬ 
pute in the field of organized labor is a parallel to sectional strife 


POLICIES OF LABOR ORGANIZATIONS 


I 37 


in the American political field; and as internal disputes in the 
nation are overlooked when foreign nations menace, the jurisdic¬ 
tional quarrel is forgotten when employers’ associations and giant 
corporations prepare to crush labor organizations. In the face of 
opposition, unions are less likely to fritter away their strength 
fighting each other. 

Jurisdictional disputes are of two general types: (i) Between 
trades over the demarcation of their boundaries, and (2) industrial 
versus trade organizations. Demarcation disputes may be sub¬ 
divided into two classes, (a) Two well-established unions may 
lay claim to certain forms of work lying in the borderland be¬ 
tween the two trades. For example, shall carpenters or sheet- 
metal workers hang iron doors? Shall the structural iron workers 
or the elevator constructors have the job of installing escalators? 
Will the use of colored plaster precipitate a conflict between the 
plasterers and the painters? In disputes of this type, the group 
selfishness of the workers is in evidence. Each group or trade strives 
to get the greatest amount of work possible without much regard 
for the rights of the other groups. Employers are often interested 
in the dispute because they are anxious to assign, wherever pos¬ 
sible, the work over which there is a controversy to the union 
receiving the lowest rate of wages, (ft) As specialization in in¬ 
dustry developed, trades that were formerly unified were split 
into a variety of allied trades. The printers’ trade has been split 
into different trades. New craftsmen have appeared, such as 
the pressmen, electrotypers, and linotype machine operators. 
Such new groups struggle for independent recognition, and new 
organizations may be differentiated out of the parent group. 
Jurisdictional disputes between trade and industrial unions arise 
because the latter claim all men working in a factory or a mine 
irrespective of craft or trade demarcations. 

The importance of jurisdictional lines to the old-line trade union¬ 
ist is illustrated by the attitude taken toward the classification of 
federal employees in mechanical trades. A long discussion about 
the matter took place in the 1931 Convention of the American 
Federation of Labor. Opposition was voiced by the Executive 
Council, and concurred in by a large majority of the delegates 
present. It was feared that the classification by the personnel 
experts of the government would differ from the jurisdictional lines 




LABOR PROBLEMS 


claimed by the different unions. It was also urged that such a 
program would result in minute classification with varying wage 
rates, thus threatening the solidarity of certain labor organiza¬ 
tions. The union definitely committed to the proposed classifi¬ 
cation was the National Federation of Federal Employees which 
soon after severed its connection with the Federation. One of the 
delegates opposing the plan of classification seemed to see in the 
proposal the idea of “one big union in the government service,” 
cutting across craft lines and nullifying jurisdictional claims. Evi¬ 
dently such a consummation would lead to the absorption of all 
federal workers by the National Federation of Federal Employees; 
and such a step is felt to be inimical to the interests of the es¬ 
tablished trade unions. 

THE INTRODUCTION OF MACHINERY 

Wage workers, as well as other human beings, dislike innovations; 
they cling tenaciously to the things with which they are familiar. 
The unionist fears the effect of new machinery and new processes 
even more than he fears the non-unionist. The new machine or 
the new method of doing work breaks down a craft or an estab¬ 
lished way of working; it endangers the accepted standards of wages, 
of working conditions, and of jobs. The introduction of machinery 
or of unfamiliar methods into any occupation requires a new 
discipline. The increasing mechanization of industry has caused a 
substitution of teamwork for individual performance. The ma¬ 
chine requires steady and speeded-up performance; the pace is set 
by the machine. In well-managed plants there is no waiting for 
materials and little chance for a brief friendly talk with other 
workers. The introduction of the machine usually brings with it 
monotony and boredom. The well-developed machine industry 
introduces system and more “bossing” than was customary in the 
pre-machine days. The leisureliness of a handcraft group is lost. 
There may be more of leisure outside of working hours; but there is 
less of leisureliness during the working period. The traditional 
attitude of the organized and unorganized wage earners toward the 
introduction of machinery has been one of hostility. History 
records many instances of the destruction of new machines by mobs 
of workmen fearful of displacement by the machine. The pack- 


POLICIES OF LABOR ORGANIZATIONS 


139 


horse men in pioneer days objected to the introduction of the stage¬ 
coach and the wagon. “Strong-arm” methods were not unknown. 
An anonymous pamphlet, 1 published in 1831, declared that the 
pernicious effects of machines “far exceed all other grievances.” 
“Unrestrained machinery demoralizes society, it substitutes idle¬ 
ness for industry, want for competence, immorality for virtue. . . . 
It has created taxes.” The wage earners have often faced the de¬ 
struction of a skilled trade and the reduction of wages; and they 
have felt that invariably the benefits of improved machinery ac¬ 
crue to the employer and to the consumer. Various unions have 
bitterly opposed the introduction of machinery, and have refused to 
allow union men to operate machines. Organized labor has been 
more successful in preventing the reduction of wages than in pre¬ 
venting the introduction of machinery, and in recent years has 
been gradually forced to accept the view that opposition to the 
introduction of machinery is in the long run futile. A new attitude 
toward improved machinery is being assumed. The unions are 
demanding that only union men operate machines and that wages 
shall not be reduced or that wages shall be increased. In this 
manner, organized labor aims to prevent the displacement of union 
men, and to gain a share of the benefits derived from the use of 
improved methods. The best example of this policy is found in the 
printing trade. The national unions in the glass industry and in 
the iron molding trade have attempted to follow the example of 
the printers, but their success has been less marked. 

Before 1890 typesetting was a handicraft art which had under¬ 
gone few changes since the introduction of printing. During the 
decade of the nineties, machine composition rapidly displaced hand 
typesetting. The invention of the linotype machine revolutionized 
the typesetting branch of the industry. The International Typo¬ 
graphical Union did not oppose the introduction of the linotype, 
but demanded jurisdiction over it. At the annual meeting held in 
1888, when only about 100 linotype machines were in operation in 
the United States and Canada, resolutions were adopted recom¬ 
mending “ that subordinate unions . . . take speedy action looking 
to their recognition and regulation, endeavoring everywhere to 
secure their operation by union men upon a scale of wages which 

1 Letters to the Present Generation on the unrestrained use of modern ma¬ 
chinery. (In New York Public Library.) 


140 


LABOR PROBLEMS 


shall secure compensation equal to that paid hand compositors.” 1 
Although the members of some locals were reluctant to learn to 
operate the machines, the national union has steadfastly adhered 
to the policy outlined when the linotype first appeared. 

The success of this policy has been very pronounced. In 1904, 
94^ per cent of the male linotype operators were members of the 
union. Wages have been maintained and raised in spite of the 
introduction of the typesetting machine; the length of the working 
day has been reduced, and the amount of unemployment because 
of the change in methods was diminished. The most notable gain 
has been in shortening the length of the working day, since the 
strain upon the operator of a linotype is greater than upon the hand 
compositor. The union has shared with the employers and public 
in the benefits of improved methods. If organized labor in other 
industries can as successfully carry out a similar policy in regard to 
the introduction of new machines and methods, the vexed problems 
centering around the introduction of machinery and the displace¬ 
ment of skilled workers would seem to be approaching solution. 

What forces enabled the typographical union to maintain firm 
control over the trade in the face of the introduction of the lino¬ 
type? Some labor leaders have attributed the success of this 
policy solely to the strength of the Typographical Union. If these 
opinions are well founded, the cigar makers, the glass workers, or 
the iron molders can successfully face the introduction of machines 
into their industry by strengthening their organizations and by 
following the course pursued by the printers. The latter, how¬ 
ever, had certain strategic advantages when they confronted the 
typesetting machine. 2 ( a ) The greatest strength of the union came 
from the control of the large newspaper offices. The boycott would 
be a particularly effective weapon against a newspaper in case of a 
serious labor dispute. ( b ) The linotype was first introduced into 
the large newspaper offices. As its use spread to the smaller offices, 
the latter were enabled to get a supply of skilled operators from the 
large offices. ( c ) Unskilled operators have not proved successful 
in operating the linotype. The hand compositor’s knowledge is 

1 Barnett, G. E., “The Introduction of the Linotype,” Yale Review,Y ol. 13, 
p. 268. 

2 Barnett, G. E., Yale Review, Vol. 13. Reprinted in Commons, J. R., 
Trade Unionism. 


POLICIES OF LABOR ORGANIZATIONS 141 

very useful to the machine operator. The third consideration is of 
great importance because in the majority of cases the introduction 
of machinery reduces the quality of workmanship required in the 
manufacture of the product. The linotype operator, on the con¬ 
trary, “must know the same things” as the hand compositor, and 
he “must think far more rapidly.” These considerations lead to 
the conclusion that labor organizations in the other trades, although 
using the same tactics, may not be able to cope with the introduc¬ 
tion of machinery as successfully as have the printers. 


COLLECTIVE BARGAINING 

Labor is organized primarily because it is vitally interested in 
the amount, method, and time of remuneration for the labor of 
wage earners. Under normal conditions and in small-scale in¬ 
dustry wages are directly determined as the result of a bargain 
between the individuals furnishing the labor power and those 
furnishing the capital. There are two forms of wage bargaining — 
individual and collective bargaining. If each individual member of 
a group of employees makes a separate and independent bargain 
with his employer, the method of individual bargaining is em¬ 
ployed. If the employees or a group of employees organized as a 
union send representatives, usually union officials, to bargain with 
the employing corporation and an agreement is reached which 
fixes for a definite period a standard wage for each group of workers 
or each class of work, the method of collective bargaining or trade 
agreement is used. The agreement is a “memorandum of the rates 
of pay and regulations” which govern for a designated period the 
management in its relation with such of its employers as are 
covered by the collective bargain. A bargain between a local shop 
committee and an employer is often called collective; but a shop 
committee is not usually in a position to bargain on a plane of 
equality with the employer. The ability to require the collective 
bargain is the crucial test of unionism. Labor disputes in an in¬ 
dustry in which collective bargaining prevails are large-scale; single 
workmen cannot be dismissed and replaced because of controver¬ 
sies over the wage bargain. The employer faces the loss of all or a 
considerable fraction of his employees in case of a dispute in regard 
to wages. 


142 


LABOR PROBLEMS 


Individual capitalists have found cooperation with each other 
advantageous. As a result, great corporations have come into 
being. The individual unit is merged into the more complex legal 
unit. The individual investor now delegates his rights and powers 
in regard to the control and management of the business into the 
hands of representatives — directors, managers, and foremen. The 
members of labor organizations maintain that a bargain between 
individual workmen and the representatives of consolidated capital 
is of necessity unfair. The trade union is a combination among 
wage earners which corresponds to the corporation in the case of 
units of capital. The wage bargain can only be equitable when 
representatives of the wage earners face representatives of con¬ 
solidated capital. Accordingly, it is maintained that the system of 
collective bargaining is simply an outgrowth of business consolida¬ 
tion. The workers are forced to unite and to bargain unitedly, or 
to face dangerous competition among themselves and to suffer re¬ 
duction of wages. The refusal on the part of the superintendent of 
a large factory to bargain with representatives of his employees is as 
absurd and unreasonable as would be the demand on the part of 
the employees for direct negotiations with the stockholders of the 
company represented by the superintendent. 

Collective bargaining enables workers to help themselves and 
thus reduce the necessity of governmental or paternalistic action. 
It is in harmony with the modern tendency toward organization. 
The history of collective bargaining, however, has burdened the 
process with a psychology of struggle. It alone or unmodified is 
insufficient to bring about teamwork in industry; and teamwork 
is especially needed between management, men, and government. 
Collective bargaining can and should be made a means of pro¬ 
moting harmony within an industry. A fair bargain — one between 
bargainers nearly equal in strength — will aid in developing mutual 
respect; it is a potent factor making for industrial peace. 

Collective bargaining usually results in the acceptance of a 
standard wage and in definitely prescribed working conditions for a 
particular kind of work or workshop. The employee is protected 
against the tendency to “nibble” at wages. Competition in regard 
to wages is limited and greater stress is laid upon efficiency and 
upon quality of product. Competition continues but it continues 
in accord with certain rules of the game. These rules tend to 


POLICIES OF LABOR ORGANIZATIONS 


143 


eliminate the sort of cut-throat competition which causes the 
deterioration of the product and the gradual lowering of the wages 
of the workers. Employers have argued that collective bargaining 
tends to reduce workers to a dead level of mediocrity and conse¬ 
quently to retard progress. Organized labor believes that employ¬ 
ers antagonistic to unions might use gradation of wage rates as a 
weapon against unions; such a practice might be used so as to 
weaken the solidarity essential to unionism. Gradation or classi¬ 
fication of workers might also be used as a cloak to cover stealthy 
reductions in the average rate of wages. It has been urged by 
writers on personnel policies that “the collective bargain offers the 
only real protection to the employer against his natural impulse 
to economize in the easiest but ultimately the most expensive way,” 
namely, to cut wages resulting in poor work, illwill, and ineffi¬ 
ciency. 1 


THE CLOSED SHOP 

An open shop is one in which union and non-union men work or 
may work side by side. In a true open shop, no discrimination is 
practiced against either union or non-union workers. As a rule, 
it is very difficult to maintain. Employers may be inclined to 
discriminate against union men in hiring or in discharging, or the 
union men may put pressure upon the non-union workers in order 
to force them into the union. The real open shop may live year 
after year but in most industries it is in the state of unstable 
equilibrium. If employers standing for the true “open shop” 
will forgo the right of arbitrary discharge, if they will place the 
final question of discharge in the hands of an adjustment committee, 
as in the clothing trades, composed of representatives of both sides 
then the employing group may come before the country with clean 
hands. But so long as they demand the open shop and the right 
of arbitrary discharge, and refuse collective bargaining, union 
men cannot be expected willingly to give up the demand for a 
closed shop. 

At least three distinct types of the closed shop may be found: 
(a) The Anti-Union Shop. The anti-union shop is closed to the union 
man. The employer will not knowingly hire a union man, and he 
will discharge any employee who openly joins a union. Frequently, 

1 Tead, O., and Metcalf, H. C., Personnel Administration , p. 468 (1920). 


144 


LABOR PROBLEMS 


the applicant for a job in an anti-union shop is required to sign a 
card stating, among other things, that he is or is not affiliated with 
a labor organization. In many cases, the job seeker is asked to 
sign a statement to the effect that he will not join a union while in 
the employ of the company. This is the famous or infamous 
“yellow dog” contract. Many bitter opponents of the other forms 
of the closed shop are ardent advocates of the anti-union form of 
the closed shop. They call their factory an open or a non-union, 
not a closed, shop; and they have much to say about the tyranny 
of the closed shop when closed by the union. ( b) The Closed Shop 
with the Open Union . The employer is allowed to hire whomsoever 
he desires to employ; but the new employee, if not a member of 
the union, must become affiliated with it. (c) The Closed Shop 
with the Closed Union. The employer is restricted to the member¬ 
ship of the union for new employees. This is the highest form of 
“ unionization ” of an establishment. Men who lose their good 
standing in the union must be discharged. If the union requires a 
large initiation fee or insists upon rigid apprenticeship rules, this 
form of the closed shop is highly monopolistic in character. Here¬ 
after, the first form will be called the anti-union shop, and the 
second and third will be termed the closed shop. 

The rules governing the closed shop are enforced by means of 
one of two methods — the card system or the check-off system. 
The card system is used most widely and is the more difficult 
system to carry out effectively. Union officials must inspect the 
shop from time to time, and appeal to the foreman or superin¬ 
tendent to discharge all employees who have not paid their union 
dues or who for any other reason are no longer in good standing in 
the union. Under this system, the union officials must frequently 
exert pressure in order to compel individual members to pay their 
union dues. 

The check-off system is chiefly used in the bituminous coal mines. 
The supervision required by union officials is very slight. The 
company agrees to deduct from the pay of its employees the fees, 
fines, and irregular assessments levied by the union. These sums 
are turned over to the treasurer of the union. Under this system 
the employee always remains a paid-up member of the union, be¬ 
cause the employer has a standing order to deduct the union’s fines 
and dues from the wages of the employee. From the standpoint 


POLICIES OF LABOR ORGANIZATIONS 


i4S 


of the union, the check-off system is a very efficient method of 
holding its members and of collecting the dues and fines. Two 
reasons have been presented for the restricted application of the 
check-off system, (i) The union desires to be less dependent upon 
the employers of its members. (2) Many employers are not anxious 
to assist in unionizing their establishments. However, very little 
friction seems to have arisen in the limited number of establish¬ 
ments in which it has been tried. 

The closed shop is a product of mutual distrust and antagonism 
between employers and employees. Organized labor has little 
confidence in the employer who demands an open shop in the 
name of liberty and freedom of contract. The union man believes, 
and not without reason, that this oft-repeated appeal to the tradi¬ 
tional rights of the individual conceals the sinister motive of keep¬ 
ing down the wage level and defeating the aims of organized labor 
for the betterment of the wage earners. The employers distrust 
their employees who demand a closed shop. They urge that the 
union wishes to control the labor supply and to dictate the con¬ 
ditions governing the operation of the plant. The opponents of 
the closed shop also proclaim it to be un-American, monopolistic, 
and unfair to the unorganized workers. The following quotation 
from a trade journal is a fair sample of the sentimental appeal 
made in favor of the open shop. “The open shop is a concrete 
example of the spirit of American institutions and represents that 
liberty which, on a larger scale, our fathers fought for. . . . The 
open shop allows a mechanic to take personal pride in his work and 
makes the amount of his earnings dependent solely on his skill and 
industry. . . . The open shop stands for American manhood.” 
The advocates of the closed shop declare that the open shop in 
many industries means low wages, the long working day, over¬ 
driving, and insanitary working conditions. As Professor Commons 
pointed out several years ago, in industries in which labor organiza¬ 
tions consent to open shop agreements year after year, three con¬ 
ditions appear to be essential: ( a ) Strong and well-disposed 
organizations must exist among both employers and employees. 

( b ) The employer must pay the same scale of wages to both union 
and non-union men. A definite rate must be agreed upon and no 
attempt be made to cut the rate. The railways have almost 
universally adopted this practice, (c) All unsettled complaints 


146 


LABOR PROBLEMS 


must be referred for settlement to a joint conference composed of 
representatives of the union and of the employers. Unions having 
full treasuries and emphasizing insurance features do not, as a 
rule, place as much dependence upon the closed shop as do those 
which are financially weaker and which do not pay benefits. 
In trades in which a long term of apprenticeship is necessary 
or required, the demand for the closed shop is not notably 
insistent. 

The two arguments in favor of the closed shop are “sentimental” 
and economic. According to the first method of justifying the 
closed shop, wages have been raised and conditions of labor within 
a given trade improved as the result of the efforts and the sacrifices 
of the members of labor organizations. All workers in a trade are 
benefited; and “he who is benefited should bear his share of the 
expenses of the benefactor.” The man who refuses to join the 
union and bear his share of the expenses necessary to the success 
of the union’s policies is a parasite and deserves to be excluded from 
employment. Through the efforts of labor organizations, unionists 
expect not only to help themselves, but indirectly to aid all wage 
earners. Viewed through these spectacles, the non-unionist or 
“scab” strikes a blow at the hearthstone of every worker in the 
land when he refuses to conform to the program of the union. At 
best, the “scab” is an extremely short-sighted man, and one who 
must not be allowed ruthlessly to take away such advantages as 
have been gained by labor organizations. According to a spokes¬ 
man of organized labor, 1 “a worker who insists on his personal 
rights irrespective of the rights of others, to work for whom he 
pleases and on terms which please him, is the anarchist of industry, 
as are those who praise and protect him in his assumed right.” 
Thus are the sacred rights of pioneer America pushed aside for the 
new point of view in a modern machine-dominated world. This 
sentimental argument in favor of a closed shop is closely paralleled 
by a statement of the Associated Employers of Indianapolis in 
regard to the shortcomings of business houses which refuse or neglect 
to join this employers’ association. “Non-members of the Asso¬ 
ciation are evading individual civic responsibility in their failure 
to help share the burden necessary to the maintenance of organiza¬ 
tion machinery that constitutes the principal bulwark of defense 
1 Marot, H., American Labor Unions , p. 121. 


POLICIES OF LABOR ORGANIZATIONS 


147 

against organized evasion of the community’s industrial tranquillity 
and commercial stability.” 

The economic necessity for the closed shop depends in a large 
measure upon the attitude of the employer. If the employer in¬ 
sists upon his right to make individual bargains with non-union 
employees, and discriminates against union men, or hires non-union 
men at a lower wage than that paid union men, the union will sooner 
or later be obliged to fight or be disintegrated. The hostile em¬ 
ployer, unless restrained by the closed shop or by a uniform system 
of wage payment for all workers coupled with a system of appren¬ 
ticeship and of promotion, can deunionize his shop unless the union 
includes practically all the workers available in that trade or in¬ 
dustry. The union facing a hostile employer anxious to reduce 
wages and to lengthen the working day, and in touch with a supply 
of non-union workers, is forced, unless it gives up all hope of 
efficient trade-union action, to adopt the closed shop policy. Under 
such conditions the closed shop means more bread and butter, more 
leisure, and better treatment for the wage earner. 


RESTRICTION OF OUTPUT 

Restriction of output is practiced by employers as well as by 
employees. Private property rights give the owner the right to 
use or not to use, but not to abuse, his property. The owner of 
an industrial plant, for example, may operate or close down as he 
sees fit, and, except in time of war, he cannot as a rule be inter¬ 
fered with. Certain public utilities, however, may be required to 
operate continuously. One purpose underlying the formation of 
large industrial combinations is that of controlling the output in 
order that prices may be raised and net profits increased. The 
withdrawal of natural resources from use, whether justifiable or 
not, is a form of limitation of output. The essence of monopoly 
is found in the power to restrict output. The advantage of a 
patent, copyright, or trade-mark is derived from the legal right to 
control the entire output of the particular article. The earlier 
form of association or pool, such as that in the iron industry or in 
the window-glass business, was also directly concerned with limita¬ 
tion of output. The famous “Whiskey Combination” limited the 
output of the distilleries in the association. The business man as a 


148 


LABOR PROBLEMS 


producer is not primarily interested in the production of commodi¬ 
ties; he is directly interested in producing values. The market 
values of a small quantity of one kind of goods may be greater than 
that of a larger quantity. It is often profitable to restrict the out¬ 
put, thus enabling the seller to raise the price sufficiently to increase 
the total income from the sale of the product. However, this 
“business discretion” or “business strategy” may prevent the 
equipment of the community being used to its fullest extent. It is, 
said Veblen, “capitalistic sabotage”; it is in many cases an at¬ 
tempt to avoid the “menace of over-production.” The policy of 
reasonable restriction or curtailment of production does not run 
counter to our accepted rules of business ethics. The business man 
does not produce without close attention to prices and probable 
profits. He does not wish “to spoil the market” for his products, 
and as a consequence put his business “in the red.” Industry 
after industry — coal, oil, agriculture, textiles, rubber, copper, 
coffee — has tried to reach a stable agreement among producers 
as to output. The leaders in these industries see financial salvation 
in reasonable restraint upon production. 

Restriction of output is a policy of unorganized as well as of or¬ 
ganized workers. Going slowly or “soldiering” on the job ante¬ 
dates unionism. Normal individuals, however, prefer to do a fair 
day’s work to using planned methods of reducing output; they 
prefer to do good work instead of poor. What are the causes of the 
widespread practice of reducing output? Under scientific manage¬ 
ment, should not a considerable portion of the blame rest with 
management — with management which is using traditional and 
unscientific methods in dealing with the manpower of the industry? 
Statistics exist in abundance proving that American industry has 
greatly increased, in recent decades, the output per worker, but 
this has been accomplished in the face of a lack of enthusiasm on 
the part of the worker, in the absence of a desire to work efficiently, 
and in spite of the fear on the part of the worker that he will work 
himself out of a job. 

At least four reasons for the restriction of output on the part 
of wage workers may readily be discerned. (1) In seasonal and 
irregular industries, the worker goes slowly in order to stretch 
out the job until another is found. (2) The wage worker as well 
as the business man sees the pecuniary dangers of a glutted market. 


POLICIES OF LABOR ORGANIZATIONS 


149 


“What appears to the employer as soldiering and lack of interest 
in their work, looks to the workers like a good way of preventing 
oversupply in the market for labor.” 1 Workers have been fre¬ 
quently urged to produce more and more in prosperous times only 
to face later a period of depression, unemployment, and “over¬ 
production.” (3) The wage worker desires to avoid a cut in the 
rate paid under the piece-wage or premium plan. Poor, unscien¬ 
tific, and tradition-burdened management has set wage rates 
carelessly and, finding the worker earning more than was antici¬ 
pated, has repeatedly cut the rate. Piece workers are almost 
universally “wise to” this proclivity of management. (4) Laziness, 
lack of physical vigor, custom, inefficient work-habits, inertia, 
and lack of interest in the job may cause conscious or uncon¬ 
scious restriction of output. Workers may also adapt their pace 
to the length of the working day or to the type of work. This 
is a sort of physiological protection against over-fatigue. Except 
as regards short periods of time, this habitual attitude does 
not result in actual restriction of output. It conserves human 
energy. 

Restriction of output may result from a curious mixture of dis¬ 
similar circumstances. In a time of prosperity when few workers 
are seeking jobs, many a worker slows down. He is not afraid of 
displacement. On the other hand, in a period of depression the 
worker wishes to piece out the job, to make it last as long as possible 
— but he must endeavor to avoid discharge and replacement. The 
foreman who is a “driver” of his men is likely to face concerted 
soldiering on the job; but the lenient foreman may also be con¬ 
fronted by the same difficulty. 2 The motives and impulses which 
lead to restriction of output are many. 

Regulation, planning, and conservation of resources should be 
differentiated from restriction. The former may involve the tem¬ 
porary reduction of output in the interests of community well¬ 
being. Restriction, on the other hand, has been well defined “as 
the intentional spending of unnecessary amounts of time, intelli¬ 
gence, and material resources in producing a desired result.” 3 
Scientific management frequently upholds regulation and conserva- 

1 Leiserson, W. M., in Mathewson, S. B., Restriction of Output, p. 167. 

2 Morgan, A. E., in Mathewson, S. B., Restriction of Output , pp. 210-211. 

3 Morgan, A. E., ibid., p. 197. 


LABOR PROBLEMS 


150 

tion, but not the using of “unnecessary” amounts of labor-power 
or of natural resources. 

Certain American labor organizations have looked with favor 
upon restriction of output by their members or upon a “make- 
work” policy. In a variety of ways the amount of work to be 
performed per hour or per day may be limited. One reason given 
for such regulation is that the quality of the work done will be 
improved. At one time, the union carpenters of a city were bound 
by the following rule: “Any member guilty of excessive work 
or rushing on any job shall be reported and shall be subject to a 
fine of five dollars.” This rule was directed against the practice 
of traditional management of paying a few men extra wages to act 
as “rushers” or pacesetters. It may be defended as a health 
measure. A local of plumbers adopted the following rule: “All 
piping appertaining to plumbing shall be done and cut by members 
of the union by hand power on the job.” That is, the work must 
be done “on the job” by twisting a long-handled die stock instead 
of by power machinery in a shop. The International Typographi¬ 
cal Union insists that “the interchanging, exchanging, borrowing, 
lending, or buying of matter previously used, in the form of either 
type or matrices, between newspapers, between job offices, or 
between newspapers and job offices, or vice versa, ... is unlaw¬ 
ful, and shall not be allowed, unless such type or matrices are 
reset as nearly like the original as possible, made up, read and 
corrected and a proof submitted to the chairman of the office. 
Transfer of matter between a newspaper office and a job office, or 
a job office and a newspaper office, where conducted as separate 
institutions, and from separate composing rooms, owned by the 
same individual, firm, or corporation, is not permissible unless 
such matter is reset as nearly like the original as possible, made up, 
read and corrected and a proof submitted to the chairman of the 
office.” These examples of make-work, and others which might 
be presented, are not unlike the proposals to destroy cotton, 
coffee, wheat, or other products in order not to spoil the market. 
Lawyers do not seem enthusiastic in the advocacy of reduction in 
the technicalities of the law. Even in educational institutions, the 
students who make excellent recitations or reports are likely to be 
subjected to the pressure of sentiment adverse to such a practice. 
Governmental employees, protected by civil service rules, are not 


POLICIES OF LABOR ORGANIZATIONS 


151 

noted for vigorous and sustained endeavors. Manual laborers, 
organized or unorganized, are not the only ones who hold them¬ 
selves down to a “modest level.” The problem is one possessing 
many ramifications. 

Restriction of output by wage workers is usually justified by 
the “ lump-of-work ” argument or the “ heal th-of-the-worker ” ar¬ 
gument. The first argument is the one frequently used by the old- 
line trade unionist. The industrial unionist and the unskilled 
workers usually emphasize the health argument. According to 
the lump-of-work argument there is a certain quantity of work to 
be performed. This quantity is assumed to be practically fixed 
irrespective of the expenses of production. By “soldiering” and 
by “taking it easy,” workers may make jobs for other workmen. 
As the wage fund theory of the English classical economists as¬ 
sumed wages to be determined by the simple arithmetical method 
of dividing the wage fund by the number of wage earners, the 
lump-of-work theory assumes that the number of wage earners to 
be employed may be ascertained by dividing a definite amount 
of work to be performed by the amount done by each individual, 
irrespective of the costs of production or the price of the product. 
When stated in this bald form and when applied to all industries, 
it is unnecessary to attempt to refute the argument. Economists 
have often condemned the lump-of-work argument as a transparent 
fallacy; but the trade unionist still clings to it. It is, therefore, 
fitting that the student of labor problems, instead of ridiculing and 
reviling the trade unionists, should try to examine the matter from 
their point of view. 

It must not be forgotten that the economist assumes freedom of 
competition and the mobility of labor, and that he is chiefly con¬ 
cerned with long periods of time. The trade unionist is interested 
in practical affairs in which economic friction bulks large, and he is 
intent upon the “short run.” The workman is chiefly concerned 
with the task of obtaining the comforts and the necessities of life 
for himself and his family; he is only vaguely interested in that 
indefinite entity known as the general welfare of society in the 
lump. The knowledge that a certain policy, if pursued by all for 
a period of years, will inevitably bring about reductions in the 
wage scale does not appeal to the average wage earner with a 
family to feed, clothe, and shelter in the direct and forceful manner 


152 


LABOR PROBLEMS 


that the immediate probability of slack work does. He sees that 
by “nursing” a particular job he may work longer or another 
fellow workman may be employed. This is something tangible, 
the other is a remote and uncertain possibility. Immediate work 
for John overshadows the vision of a chance of future employment 
for Tom, Dick, and Harry, and other unnamed and unknown 
individuals. 

Consider such a business as the stove or the window-glass in¬ 
dustry. The demand for stoves or for window glass does not vary 
in a manner commensurate with changes in the market price of 
those articles. There is a demand which does not vary greatly 
from year to year; or, if it does vary, the variations are due to 
changes in business conditions rather than to any changes in the 
price of stoves or of window glass. From the point of view of the 
skilled stove molders or the window-glass workers, there is a real, 
concrete lump of work. If some of the stove molders or of the 
window-glass workers “rush” or “increase the pace,” the others 
will be thrown out of a job. Some will be idle or they will be 
forced into other industries. Manufacturers clearly recognize that 
the market will carry only so much of their product, and a certain 
lump-of-work is required to make this product. It is this particu¬ 
lar lump-of-work in which the trade unionist is interested. 

The intricacy of today’s industrial operations separates widely 
in time and space the effect of an action from the action itself. 
This is one of the characteristic marks of the industrial world of 
the twentieth century. It is this complexity which often causes 
restriction of output. The effect of an action is not clearly seen; 
or its effect is seen to be so widely distributed that a man’s personal 
interest in it seems infinitesimal. Again, the belief that restriction 
of output by wage earners strikes a blow at monopoly profits 
furnishes an underlying motive for the practice. 

When restricting the output of individual workmen, in order to 
make work for other workers in the same trade, the union man is 
actuated by selfish motives; he is interested in benefiting himself 
and the members of his union. When the unionist adopts this 
policy of restriction he is selfish, and he may be short-sighted; 
but he is not devoid of intellectual acuteness. Monopoly is usually 
condemned as retarding economic progress; but individuals and 
classes certainly derive economic advantages through the exercise 


POLICIES OF LABOR ORGANIZATIONS 


*53 


of monopolistic power. Likewise, restricting the output of workers 
in order to give employment to a larger number in a restricted 
group may be condemned as injurious to society, but it is not 
clear that the members of that particular group are injured. And 
it is difficult to prove that it is more immoral for workers to re¬ 
strict output or to give as little work as possible for as high a wage 
as possible than for the managers of great syndicates to restrict 
output or to try to get as much work as possible for the least possible 
wage. 1 The lump-of-work argument is surely not fantastic so long 
as class or interest antagonisms play an important role in social 
and political affairs, and in a country where each person is still 
expected and urged to look out for “number one.” 

Still another phase of the argument presents itself. If the work¬ 
ers in one establishment are speeded up and those in competing 
establishments maintain the old rate of speed, there is no certainty 
that the speeded-up workers will receive their share in the extra 
profits due to these extraordinary efforts. But the workers in 
other establishments will soon be forced to follow the lead of the 
first establishment, and the increase in total output may cause 
such a reduction in price as to reduce the total value of the output. 
In an industry producing a product for which the demand is 
inelastic, this is not a purely imaginary contingency. In such a 
case, a readjustment of wages and of employment will occur within 
that industry. Outsiders might benefit from the speeding-up of 
the group, but the members of the group would lose rather than 
gain. Even if the value as well as the amount of the output were 
increased, unless the workers were strongly organized — practically 
a monopolistic group — there is little reason to suppose that they 
could gain concessions from their employer equivalent to the 
increased speed of the worker and to the additional expenditure of 
energy required of him. 

Restriction of output is often justified as necessary in order to 
preserve the health and vigor of the worker, that is, to conserve 
the human resources of the nation. Energy and the ability to 
produce are the workingman’s capital, but it is intangible and is 
not adequately protected by law. The trade unionists declare 
that speeding up beyond certain more or less definite limits impairs 
the efficiency of the worker and reduces the total output during 
1 See Mitchell, J., Organized Labor , Chap. 29. 


I 54 


LABOR PROBLEMS 


his lifetime. From this point of view, it is little short of robbery 
to wear out a workingman quickly and impair his capital while 
only paying “living wages.” “An industry which uses up the 
vital energy of a worker in a few years is coining the nation’s life¬ 
blood into dividends. No industry has a right to more than that 
amount of the worker’s energy which can normally be replaced by 
the food and rest allowed him.” 1 It is obviously to the interest 
of the worker and of society that overdriving and sweating be 
abolished. As long as the policy of organized labor is directed 
toward such a consummation, the trade union is acting in a legit¬ 
imate and desirable manner. 

HOURS OF LABOR 

One of the most familiar and insistent demands of organized 
labor has been for a shorter working day or week. A little over 
a century ago the typical length of the working day was twelve 
hours or from sun-up to sun-down. In cotton factories as late as 
the decade of the forties of the nineteenth century the working 
day was over twelve hours in duration. Not until after 1880 was 
the normal working day in breweries reduced below fourteen hours. 
“In 1886, with the exception of two establishments, every ton of 
pig-iron produced in the world was made by men working twelve 
hours per day and seven days per week.” 2 Only recently have 
the twelve-hour day and the seven-day week disappeared in cer¬ 
tain departments of the iron and steel industry. The shorter 
working day which organized labor demanded in the twenties of 
last century was ten hours in length. Successively, a ten-hour, 
a nine-hour, and an eight-hour day were advocated. Now, the 
five-day week and the six-hour day are being thrust into the 
foreground. 

During recent decades, the productive power of mankind in the 
Western world has been multiplied many times because of the use 
of coal, oil, and water power through the agency of steam and 
electricity. Thanks to the magic of machines and science, it is 
possible to produce amazing quantities of commodities with a 
short working day or week. This miracle-working team is also 

1 Martin, “Do Trade Unions Limit Output?” Political Science Quarterly , 
Vol. 17, p- 37 i- 

2 Carnegie, A., The Forum , Vol. 1, p. 544. 


POLICIES OF LABOR ORGANIZATIONS 


155 


giving leisure time to the masses as a birthright. The machine 
has not reached its limit. More and more will routine and monoto¬ 
nous work and heavy lifting be performed by the Iron Man. In¬ 
stead of men and women being the feeders and slaves of machines, 
the machine will indeed become the servant of mankind. Brain 
power rather than muscle is demanded after the machine age be¬ 
comes mature. 

The fundamental purpose of the labor movement is to enable 
wage workers as a class to receive a portion of the material and 
immaterial benefits accruing to society because of industrial 
progress. Increased leisure may take one or more of several forms 
— a short working day, a short working week, a short working 
year, or a shorter working life. A short working year may be ten 
months in length. In many types of industry, the summer months 
of July and August are characterized by low productivity. In 
other lines, the winter months might be omitted from the calendar 
of toil. It has been suggested that in many lines of endeavor a 
man might be retired before he is worn out, and take his leisure in 
old age. Such a program would necessitate an old age pension or 
insurance system. The discussion in the remainder of this section 
will relate to the proposals for a short working day or week. 

The early demand for a short working day coupled leisure and 
education; it emphasized the social value of a short work-period. 
The good citizen, it was firmly believed, must have some schooling 
and have leisure in order to study intelligently the problems which 
a democratic form of government thrusts upon its citizens. This 
argument was soon supplemented by another. A long working 
day was alleged to undermine the health and stamina of the 
workers, sending them prematurely to the human scrapheap. 
The long working day, particularly when the work is specialized 
and the strain intense, tends to weaken, degrade, and brutalize; 
the short working day tends to improve the health of the workers, 
to reduce the amount of intemperance and dissipation, to uplift the 
worker and his family by giving the former time for rational enjoy¬ 
ment and for family and civic duties, and to improve the stamina 
of the race. “ The first school of morals, family life, is a closed book 
against the man who only comes home dead tired late at night.” 
The man who works in shop or factory twelve hours daily cannot 
take an intelligent interest in political affairs or in union policies. 


LABOR PROBLEMS 


156 

About fifty years ago, another theory was formulated which 
insisted that shortening the working day actually increased wages. 
According to this optimistic theory, the amount received in the 
pay envelope depended primarily upon standards of living, and 
a short working day helped lift standards of living. The familiar 
and oft-quoted rhyme illustrates the point: 

Whether you work by the piece or work by the day, 

Decreasing the hours increases the pay. 

With a shorter working day, it was urged, more workers would be 
required and more machinery would be used. Higher wages and 
the increase in the number of wage earners required would in turn 
increase the demand for the products of industry. While this 
argument may not be without serious fallacies, an increase in wages 
and a stimulation of wants among the wage workers does swell 
the demand for certain kinds of goods and does lead to an expansion 
of the industries providing the comforts and necessities of life. 
Tropical countries do not offer excellent markets for the manu¬ 
factured goods of the temperate zones because the working classes 
have few wants and receive very low wages. 

Before 1929 and the beginning of the depression, it was argued 
that reducing the working day from twelve, ten, or nine hours to 
eight, as a rule, increased output. The shorter working day called 
for increased rapidity of action. The validity of this argument 
depended upon the amount of reduction in the working day and 
upon the nature of the industry concerned. There was a con¬ 
siderable mass of statistical material showing that in numerous 
cases a reduction to an eight-hour day increased output per worker 
per day. Obviously, successive reductions in the length of the 
working day would finally cause reduction in the output per man 
per day. 

Finally, it is being argued that a short working day or week will 
reduce unemployment. A short working day, it is contended, will 
divide a fixed lump of work among more workers; but there is no 
“ fixed lump of work.” Attempts to reduce a complex social 
situation, such as the unemployment problem grows out of, to a 
simple mathematical basis are almost inevitably doomed to failure. 
However, the problem today is not so much that of increasing 
productivity as that of finding consumers able to purchase, and of 


POLICIES OF LABOR ORGANIZATIONS 


157 

adjusting productive capacity to the demands of consumers. A 
short working day or week, say a thirty-hour week, may be antici¬ 
pated in the not distant future. 

The temporary effect of a sudden and considerable reduction in 
the length of the working day or week may be very different from 
the permanent results. Indeed, the temporary effects may often 
be undesirable. The effect of the sudden acquisition of riches 
upon families is not infrequently fantastic. Adult workers suddenly 
released from a long working day or week may waste their extra 
leisure in ways which cause physical, mental, and moral deteriora¬ 
tion. But in the long run and with the incoming generation, these 
temporary evil effects will, in a large measure, disappear, and better 
use will be made of the increased amount of leisure time. Improve¬ 
ment in the habits, manners, and customs of the mass of humanity 
is a matter of slow growth even under the most favorable circum¬ 
stances. The increasing stress and strain incident to industry 
as carried on in the factory of today make the need for increased 
leisure imperative. At the time when improved means of com¬ 
munication and of transportation, the enlargement of the market 
area, and the growing intricacy of social and political affairs de¬ 
mand a broad view of the world and its activities, occupations 
have been so specialized and subdivided that the life of the average 
wage earner is cramped. The wage worker’s daily work and home 
environment tend to contract and astigmatize his vision at the 
time when peoples and nations have been brought into close con¬ 
tact with each other. The disadvantages caused by this grim 
paradox can be diminished by an increase in the leisure time 
allowed specialized workers, by an enlargement of educational 
facilities and an improvement in the methods of instruction, and 
by more opportunities for healthful and invigorating recreation. 

THE LIMITATION OF APPRENTICES 

The rapid industrial changes of recent decades, the disappearance 
of many old handicrafts, and the appearance of many new and 
not well-defined trades or occupations have reduced the necessity 
for a long apprenticeship. In many lines none is required. On 
the other hand, the restriction of immigration has led to a revival 
in interest in the preparation of young workers for jobs in certain 


LABOR PROBLEMS 


158 

industries. At the present time, the apprentice is rarely able to 
learn his trade from a journeyman or a master workman who is 
skilled in all the branches of the work of his craft. Subdivision of 
labor has reduced the demand for all-round men; and in the 
modern shop adequate instruction of the apprentice is a burden 
for both the journeyman and the employer. The shop or the 
factory exists for the purpose of producing at a profit an output of 
marketable articles; it is not, except in an incidental and extrane¬ 
ous manner, an educational institution. The journeyman and the 
foreman are not usually skilled teachers; and the apprentice will 
inevitably spoil considerable material and damage tools and ma¬ 
chines. There is no tangible and immediate identity of interest 
between the employer and the apprentice. The latter is interested 
primarily in gaining an adequate knowledge of the variety of de¬ 
tails connected with his trade; on the other hand, his employer is 
constantly striving, under the pressure of competition and the 
spur of the desire for larger profits, to reduce the expenses of pro¬ 
duction and to increase the output of each worker. If the employer 
sacrifices the efficiency of his plant in order to give young workers 
trade education, he may be unable to meet his competitors on a 
plane of equality. Although skilled workers may be urgently de¬ 
manded, employers are often unwilling individually to shoulder 
the burden as long as some shops refuse to act as adequate schools 
for apprentices and frequently attract the young journeyman from 
the shop which has borne the expense incidental to his period of 
apprenticeship. 

In order that the apprentice may become skilled in more than 
one simple and minute class of work, he must be transferred from 
machine to machine and from department to department. At 
the moment when the apprentice becomes proficient in any particu¬ 
lar operation he should be transferred to some other job or depart¬ 
ment. At this point, however, the immediate considerations of 
output lead the foreman to desire to keep the boy where he is. 
Since the foreman is naturally more interested in the production 
of machines today than in the training of boys who may become 
skilled workers tomorrow, and who may get jobs elsewhere, the 
education of the would-be skilled worker is likely to suffer. The 
constant temptation is to teach him a few simple operations and 
to pass on to him certain portions of the work hitherto done by 


POLICIES OF LABOR ORGANIZATIONS 


159 


skilled men. 1 Temporarily the employer finds it advantageous to 
train the young worker and apprentice for routine rather than for 
skilled work. When the latter finally demands higher wages he 
can be replaced by another. The gradual increase of subdivision 
of labor and the simplification of operations have made it less 
difficult for a boy to learn a smattering of a trade, and more difficult 
to learn a trade thoroughly. 

Unions are not able to insist that all journeymen must have 
served a regular apprenticeship. If the qualifications of a worker 
are considered satisfactory by an employer, the union usually 
acquiesces in that judgment; but it insists that the union scale of 
wages be paid. To demand high initiation fees and a long ap¬ 
prenticeship would tend, except in a few cases, toward the growth 
of a large number of non-union workers ready to accept lower than 
union wages. Sooner or later this competition would prove fatal 
to the union insisting upon a stiff policy of exclusion. On the 
other hand, it is to the advantage of an old-line trade union to 
have a competent and skilled membership. The building trades 
unions, organizations in the printing trade, machinists, and molders 
are especially interested in the adequate training of apprentices. 
The length of apprenticeship is usually three or four years instead 
of the traditional seven. The apprenticeship period normally 
begins between the ages of fifteen and twenty-one. The molders 
limit the number of apprentices to one for every five journeymen; 
the machinists place the ratio at one to ten. 


BENEFIT FEATURES 

Among English labor organizations benefit features have been 
of greater importance than among American unions. Before unions 
were legalized in England in 1824, many unions actually existed 
under the guise of benefit associations. Several reasons may be 
given for the greater prominence of these features in England. 
The English organizations are older; they are more closely united; 
English unions are trade unions, not industrial unions, and there¬ 
fore only contain men having approximately the same skill and 
income; the membership of the English unions includes few who 
are not of English birth and descent; the mobility of labor is 
1 See the writer’s Education and Industrial Evolution , pp. 198-200. 


i6o 


LABOR PROBLEMS 


not so great as in this country; insurance against sickness and 
unemployment did not appeal particularly to the workers in a new 
country of great possibilities and rich in natural resources; and 
the militant activities of American unions have been more absorb¬ 
ing than in the case of English unions. 

The benefits paid by the national unions and their locals affiliated 
in the American Federation of Labor are presented in the following 
table. 1 


1928 1929 1930 

Sick. $ 2,377,746.38 $ 2,831,936.82 $ 3,649,703.15 

Death. 16,623,585.93 17,598,287.03 18,527,095.00 

Unemployment. 665,279.88 276,717.50 3,311,279.50 

Old Age. 4,712,731.29 4,883,027.88 5,910,995.41 

Disability. 3,825,578.46 2,707,187.63 3,234,066.93 

Miscellaneous. 5,149,052.60 3,945,287.63 2,064,839.57 

Total Benefits . . $ 33 , 353 , 974-54 $32,242,444.49 $36,697,979.56 


The most notable change in the three years under consideration is 
the marked increase in unemployment benefits. The Cigar Makers’ 
International Union has been one of the best known “beneficiary 
organizations in the United States”; but loss of membership in 
recent years and an increase in the average age of members have 
forced it to suspend payment of sick benefits, and the death bene¬ 
fits paid in 1931 were only about one-half the amount paid in 1927. 
The railway brotherhoods have fairly comprehensive benefit pro¬ 
grams. The printers, the pressmen, the carpenters, and railway con¬ 
ductors support homes for their aged, invalid, and infirm members. 

The effects of the benefit system upon labor organizations may 
be summarized as follows: (1) It tends to increase the membership 
and make it more stable. The direct and visible flow of benefits 
stimulates loyalty to the organization. (2) The national body is 
strengthened. (3) Unions having large benefit funds in their 
treasury are more conservative than those having an empty 
treasury; although the presence of funds increases the probability 
of successful aggressive action, the union without funds, like the 
man without property, is disposed to radical action. (4) The 
disciplinary power of the union over its members is strengthened 
by the possibility of receiving benefits in case of sickness or other 

1 Proceedings of the 1931 Convention of the American Federation of Labor , p. 99. 











POLICIES OF LABOR ORGANIZATIONS 161 

difficulty. A member of a local will not withdraw upon slight 
provocation and thus lose the right to receive benefits. (5) The 
payment of large benefits has been a feature of trade rather than 
of industrial unions. There is reason for believing that greater 
difficulties would be encountered in working out a successful benefit 
system for an industrial union in which are united men of varying 
skill and intelligence, and of different nationalities. The benefit 
system of trade unions may tend, therefore, to emphasize trade 
demarcations, to increase jurisdictional disputes, and to delay 
the amalgamation of labor into a strong, coherent, centralized 
body. (6) A union paying unemployment benefits may use the 
plan as a means of controlling the labor market within a particular 
trade. A skilled man, out of work, who is receiving benefits from 
his union will not be sorely tempted to take a job at a rate less 
than the union prescribes. 

In forecasting the future development of benefit features among 
American labor organizations, two points should be kept in the 
foreground: ( a ) The extension of social insurance in the form 
of old age pensions, of unemployment insurance or reserves, or of 
health insurance would prevent or modify, in a considerable degree, 
the further development of this function of unionism. ( b ) If in¬ 
dustrial unionism or amalgamation increases relatively to trade 
or craft unionism, the extension of the benefit program will doubt¬ 
less be retarded. 


REFERENCES 

Atkins, W. E., and Lasswell, H. D., Labor Attitudes and Problems, 
Chaps. 16-19 

Blum, S., Labor Economics, Chaps. 15 and 16 
Catlin, W. B., The Labor Problem, Part 3 
Estey, J. A., The Labor Problem, Chaps. 3-5 
Furniss, E. S., Labor Problems, Chap. 10 
Gemmill, P. F., Present-Day Labor Relations, Chap. 1 
Groat, G. G., Introduction to the Study of Organized Labor, Chaps. 16- 
19, 24 

Hunt, E. E., Scientific Management since Taylor, Chap. 16 
Mathewson, S. B., Restriction of Output among Unorganized Workers 
Slighter, S. H., Modern Economic Society, Chap. 9 
Tannenbaum, F., The Labor Movement 
Watkins, G. S., Labor Problems, Chaps. 20 and 21 


CHAPTER X 


COERCIVE METHODS 

STRIKES AND LOCKOUTS 

A strike, according to the definition given by the United States 
Bureau of Labor Statistics, “is a concerted withdrawal from work 
by a part or all of the employees of an establishment, or several 
establishments, to enforce a demand on the part of the employees.” 
A strike occurs when wage earners unitedly cease work but attempt 
to retain their places as employees. The purpose of a strike is 
usually to obtain some improvement in working conditions or to 
prevent some change which is considered disadvantageous to the 
workmen. When the employer closes his shop because of a dis- 
agreement with his employees a lockout occurs. The difference 
between a strike and a lockout lies chiefly in the initiation of the 
action which stops the wheels of the industry. The strike is one 
of the most formidable weapons in labor’s armory. It is not a 
logical or a just way of settling industrial disputes; it is in essence 
an appeal to financial or brute strength and endurance. During 
a strike, emotional appeals are made. Group loyalty is demanded 
and a psychological state is developed similar to that which is 
generated during a war between nations. A strike is a battle 
in which the general public is interested, but about which the man 
on the street knows little. 

The slave insurrections of Rome and the peasant wars of medi¬ 
eval Europe were the prototypes of the strike. Some references to 
strikes are found in the history of the fourteenth, fifteenth, and 
sixteenth centuries. Disturbances resembling strikes occurred in 
the American Colonies in the eighteenth century. In 1741, the 
bakers of New York City refused to operate because it was al¬ 
leged prices were set too low by public authorities. 1 The first 

1 Commons, J. R., and Associates, Hdstory of Labor in the United States , 
Vol. 1, p. 53. 


162 


COERCIVE METHODS 


163 

“authenticated strike” in the United States was that of the 
journeyman printers of Philadelphia in 1786. 1 The shoemakers 
of Philadelphia conducted strikes in 1796, 1798, and 1799. I n 1803 
a strike of sailors occurred in New York City. The sailors de¬ 
manded an increase of wages from $10 to $14 per month. In 1809 
the cordwainers of New York City went on a strike. The term 
“scab” was used at this time. A strike of carpenters in Boston in 
the spring of 1825 exhibited many characteristics of strikes in 
recent decades. A strategic time in the spring following a con¬ 
siderable fire was selected for the strike; a demand was made for 
a ten-hour day. The “gentleman engaged in building” opposed 
this attempt to alter the working day “which has been customary 
from time immemorial” because it would open the way to idleness 
and vice. The agitation was felt to be of “foreign origin.” 2 In 
1834 an interesting strike occurred in the mill town of Lowell. 
A large number of girls struck to prevent a reduction of wages. A 
newspaper of the period reported that “they have committed some 
things which females ought not to have done such as processions 
through the streets, marching ankle-deep in the mud and waving 
their handkerchiefs and scarfs, and one or two of them delivered 
public speeches.” They also went to the banks and drew out their 
savings in specie in an attempt to break the banks. The ring¬ 
leaders were dismissed and more workers were brought in from the 
country to take their places. They were obliged to accept the 
reduction “which had been proposed in kindness to them for if 
not submitted to, the mills in the present state of business would 
have been of necessity closed.” 3 In the above description of this 
early strike may be noted the opposition to public speaking by the 
girl strikers, the bringing in of strikebreakers and the statement 
of the kindness of the employers in insisting upon a reduction of 
wages. During the period of rising prices immediately preceding 
the panic of 1837 many strikes occurred. The oft-quoted state¬ 
ment of a New York City newspaper in 1835 was that “strikes 
are all the fashion.” A unique strike occurred during this period 
among the women shoebinders of Lynn. These women were home 
workers. They called a meeting and resolved that no more work 

1 Ibid., Vol. 1, p. 123. 

2 Ibid., Vol. 1, pp. 158-162. 

3 Niles’ Register, March 1, 1834, p. 5. 


164 


LABOR PROBLEMS 


should be done until an increase in wages was granted. After a 
struggle of about four weeks the strike was lost. These early 
strikes were not of far-reaching importance. Labor organizations 
were ephemeral; and the relations between employer and employee 
were in a large measure personal and bargaining was individual. 
The strikes of far-reaching influence in which the general public 
are vitally interested appear at a later date. The first great labor 
dispute in the United States was the railway strike of 1877. This 
strike stopped railway traffic and was accompanied by serious 
rioting and the destruction of property. The center of the dis¬ 
turbance was at Pittsburgh. State troops were called out and 
gatling guns were used. 1 

The union and the strike are comparatively new social phe¬ 
nomena. The legal foundations of the present social order were 
laid before group action was important. However, associations 
other than the labor organizations use weapons similar to that 
of the strike. On several occasions farmers have carried on a 
“milk war” or strike. They have withheld the supply of milk and 
have used violence against those who continued to furnish milk. 
Ostracism of the “scab” farmer has been utilized; and a strategic 
time for a “strike” has been selected. 2 A “strike of capital” oc¬ 
curred in a certain city located near the borders of another state. 
The traction company was engaged in a controversy with the city 
authorities over the granting of a new franchise. Late one night, 
the company, without warning, removed all the street cars from 
the city, running them over an interurban line to sidings located 
in another state. When the morning came, the city was without 
street cars and the cars were outside the jurisdiction of the city 
and of the state. This was clearly an attempt to force the city to 
accept the terms of the traction company by withholding the use 
of the cars. In a strike, workers withhold labor power; in this 
case, capital goods were held out of use. 

No accurate statistics of strikes and lockouts prior to 1881 are 
available. The Bureau of Labor Statistics has obtained informa¬ 
tion regarding 1,440 strikes. Of this total, only four occurred 
prior to the opening of the nineteenth century. During the quarter 
of a century from 1881 to 1905 inclusive, 36,757 strikes are recorded 

1 Sixteenth Annual Report of the Commissioner of Labor, Chap. 3. 

2 In August, 1932, a serious “strike” of Western farmers occurred. 


COERCIVE METHODS 


I( ^5 

directly affecting 181,407 establishments. The largest number of 
strikes occurring in one year was. 3,494 in 1903. The maximum 
number of employees thrown out of work is found in 1894, the year 
in which occurred the Pullman strike. The number was 660,425. 
In 1902, in which year occurred the anthracite coal strike, 659,792 
employees were thrown out of work because of strikes. The total 
number of lockouts during the period 1881 to 1905 was 1,546; 
and the number of employees locked out, 716,231. Slightly more 
than one-fourth of the total number of strikes occurred in the 
building trades; but nearly one-third of the total number of 
strikers were in the coal and coke industry. Nearly one-half of the 
total number of strikes occurred in three great industrial states — 
New York, Pennsylvania, and Illinois. Of the total number of 
strikers involved, one-fourth were in Pennsylvania. 1 The number 
of strikes and strikers in general tended to increase up to 1922. 
The number of strikes in the five-year period 1915-1921 was over 
six times the number in 1881-1885, and the number of strikers 
fourteen times. In order to make the comparison on a basis which 
would eliminate the influence of the growth of population, rela¬ 
tive figures have been compiled per one million workers. On this 
basis, the number of strikes was over two times as many in 1915- 
1921 as in 1881-1885, and the number of strikers was multiplied 
nearly five times. 2 

From 1922-1930, the seriousness of the strike problem declined. 
The following table presents the relative number of strikes and 
lockouts in the period 1916-1930, inclusive. 3 


Year 

Disputes 

Employees 

Year 

Disputes 

Employees 

1916... 


100 

1924... 

• • • 33 

4 i 

1917... 

... 117 

77 

1925... 

• • • 34 

27 

1918... 

88 

78 

1926... 

... 27 

21 

1919... 

96 

260 

1927... 

.. . 19 

22 

1920... 

90 

91 

1928... 

. . . 17 

22 

1921... 

63 

69 

1929... 

.. . 24 

15 

1922... 

29 

IOI 

1930... 

. . . 17 

10 

1923... 

41 

47 

I 93 I ••• 

. . . 24 

17 


1 Statistics compiled from the Twenty-first Annual Report of the Commissioner 
of Labor , Chap. 1. 

2 Douglas, P. H., Publications of the American Statistical Association, Sept,, 
1:923. 

3 Monthly Labor Review, June, 1931, p. 23; Aug., 1931, PP- 78 ff.; June, 1932. 


















i66 


LABOR PROBLEMS 


The marked decline in labor disputes indicated in the precedii^g 
table may be attributed in part to better management methods, to a 
decline in the strength and aggressiveness of labor organizations, 
to the increasing acceptance of the notion that reasonably high 
wages are desirable from the managerial point of view, to the 
growing strength of large aggregations of capital and to the in¬ 
creased use of trade agreements, mediation, and arbitration. 
These reasons are somewhat interrelated. The depression of 1929- 
1932 will probably bring in its wake an increase in the number and 
importance of strikes. 


CAUSES OE STRIKES 

Among the more important causes of strikes are: for an increase 
of wages; against reduction of wages; for a reduction in the 
length of working day or week; and for the recognition of the 
union or the enforcement of union rules. Doubtless in many 
instances the real cause of a strike is not the one which seems 
uppermost. The cause assigned in statistical investigations may 
be the precipitating one; but a long chain of underlying irritations 
may constitute the real reason for the outburst. The demand for 
the recognition of the union is in reality one connected with wages 
and working conditions. It is a means to an end. The relative 
importance of different causes changes with fluctuations in the 
business cycle. For example, the demand for higher wages is 
especially prominent during a rising tide of prosperity. 

VIOLENCE CONNECTED WITH STRIKES AND LOCKOUTS 

Extreme differences of opinion exist as to the prevalence of 
violence during strikes, and as to the attitude of organized labor 
toward the use of force in labor disputes. John Mitchell, the 
famous president of the United Mine Workers, declared that “the 
conduct of strikes without violence is as advantageous and success¬ 
ful as the use of violence is futile and immoral. In the long run, 
violence acts as a boomerang and defeats its own purposes.” 
On the other hand, a champion of the “union smashers” declares: 
“Organized labor knows but one law, and that is the law of physical 
force — the law of the Huns and Vandals, the law of the savage. 
All its purposes are accomplished either by actual force or by the 


COERCIVE METHODS 


167 

threat of force.” The violence occurring during a strike is often 
exaggerated; and much violence is due to outsiders or to the 
unauthorized acts of irrepressible members of the union. Under 
any condition, the presence of large numbers of idle men in a 
mining town or a manufacturing city is prolific of brawls and of 
violation of law. Every holiday brings its additions to the normal 
number of disturbances in a city. Furthermore, it is not fair to 
hold the union and union officers responsible for all the acts of 
union men. Newly organized and undisciplined unions of unskilled 
or semi-skilled men are most prone to resort to violence. Well- 
organized unions of skilled men, supported by a full treasury, 
usually discountenance violence unless defeat is staring them in 
the face. A strike is, however, an attempt to coerce an employer 
or combination of employers, and close contact between union 
men and strikebreakers always contains elements of danger. A 
statement made by Professor T. S. Adams a quarter of a century 
ago is still pertinent: “In short, I see no escape from the conclusion 
that the typical strike is waged in an atmosphere so surcharged 
with menace, that widespread intimidation and sporadic acts of 
violence are precipitated as inevitably as the atmosphere of the 
earth precipitates dew.” 

It must not be forgotten, however, that employers are often as 
brutal as the union “sluggers,” but in a less conspicuous and more 
impersonal manner. They are ready, and sometimes eager, to 
starve their striking workmen, or to terrorize them into submission. 
The unionist is justified in calling attention to the fact that much 
is spoken and written as to what the union men should do or not 
do, while but little is said as to the responsibilities of employers to 
men locked out, for the use of the blacklist, for the hiring of private 
police, and for the eviction of helpless tenants. The employer can 
often accomplish his purpose in such a way that the motive is 
hidden. Brutality on the part of the employer may be clothed in 
the radiant garb of altruism; not so in the case of the employee. 
The employer can use more subtle, but just as effective, weapons 
than the club. Employers, as well as their striking employees, 
often break laws —such as the acts in regard to safeguarding 
machinery, rebating, adulterating products, etc. Bribery and the 
corruption of governmental inspectors are by no means unknown. 
The employer often sets the employee an example of law evasion; 


i68 


LABOR PROBLEMS 


and then the former too often escapes punishment because of 
technicalities in legal procedure or through political favoritism. 
We should not condone strike violence on the part of harassed 
workingmen, but we should more strongly condemn the long- 
distant and dispassionate maiming and murder of workers. The 
man who stuffs the ballot-box, connives with racketeers, refuses to 
safeguard machinery as required by law, or adulterates his products 
with harmful ingredients, commits a crime as well as the striker 
who slugs the scab taking his job. In one strike, the strikers are 
reported to have asserted, correctly or incorrectly, that troops had 
been used to break doWn their organization. It was further as¬ 
serted that strikers had been shot down when there was no lawful 
occasion for shooting. The strikers finally held that a state of 
war existed, and threatened to shoot a trooper for every striker 
shot by the state troops. The striking unionist wants results. He 
may not believe in violence; but if the violence of some other 
person leads to the unionizing of a shop, he does not feel sorrowful. 
The employer who is confronted with a strike also wants results; 
and he likewise may not strenuously oppose a program which 
gets results favorable to him. 

The intense hatred manifested toward the strikebreaker or 
“scab” is a cause of much violence during the course of a strike. 
The circumstances which produce this intense aversion are often 
not clearly recognized. A strike frequently involves the threat, 
if not the reality, of poverty and suffering for the families of the 
strikers. The strikebreaker is one who seems to be taking the 
bread out of the mouths of the wife and children of the striker. 
Early wars were usually fought for the control of food supplies. 
A job is the modern source of supply for the mass of the people. 
It is natural that “Thou shalt not take thy neighbor’s job” should 
be a real, living commandment to the wage earner. It is not strange 
that the strikebreaker should be considered to be an outcast and 
a traitor to his class. Business combinations hate the price-cutting 
establishment and often try to injure it. Physicians and dentists 
are very bitter toward the advertising and fee-cutting members 
of their respective professions. It may also not be entirely gratui¬ 
tous to point out (i) that in America there has been much disregard 
of human life — much mob violence, many accidents in factories 
and on railways and in street traffic, many lynchings, and numerous 


COERCIVE METHODS 


169 

homicides. Human life is valued cheaply in this country. (2) The 
man who is accustomed to face danger in the shop, on the railway, 
or in the occupation of a linesman or of a structural iron worker, 
is not likely to be adverse to the use of violence when his passions 
are aroused. 

LOSSES DUE TO STRIKES AND LOCKOUTS 

The direct losses due to strikes and lockouts measured by the 
reduction in wages and in profits, are often large; but if reduced 
to a per capita basis, the amount seems trifling. It is not difficult 
to exaggerate the direct financial losses due to strikes. Frequently 
the time of unemployment is merely shifted from one season of the 
year to another. Furthermore, the most significant losses are 
frequently in other industries dependent upon the industry in 
which the strike occurs. The greatest losses from a strike in the 
soft coal fields are in connection with the shutdowns and the 
resultant unemployment in many lines of business dependent upon 
a coal supply. A railway strike will very shortly disorganize the 
industries of many cities and districts. The losses direct and in¬ 
direct of strikes in key industries are enormous. 

Strikes and lockouts are weapons used by organized labor which 
seriously affect the public. The orderly processes of industry and 
trade are interfered with; the newspapers give front page space to 
many episodes connected with industrial warfare. A strike is an 
eruption which indicates the existence of serious but often hidden 
disturbances. A strike is usually preceded and followed by a pe¬ 
riod of indifference on the part of workers and restriction of output. 
The great losses in industry are not the spectacular ones in case of 
strikes but the every-day reductions of efficiency which accompany 
illwill, indifference, and poor management. It is less expensive 
“to have men belligerently out than to have them sullenly in.” 
The growing recognition of the importance of goodwill and of con¬ 
tinuity in industry is leading management to place more emphasis 
upon the study of ways and means of reducing friction in industry. 

NEW ASPECTS OF STRIKES 

The growth of large-scale industry, of trusts, and of employers’ 
associations which are firmly knit together, affects the efficacy of 


LABOR PROBLEMS 


170 

the strike as a weapon of organized labor. In the days when 
competitors were many, strikes were often terminated because the 
employer feared that some of his business would be permanently 
absorbed by his competitors and that his business would suffer 
not only during the strike but after its termination. In many of 
the leading industries, centralization has proceeded so far that this 
fear is largely removed. The strike, producing a scarcity of supply, 
may even tend to augment instead of to diminish profits — prices 
will go up and perhaps wages may be forced down. If profits are 
endangered, some concessions can be given the workmen and prices 
can be raised. A small competing firm finds it much more difficult 
to accomplish this feat than a large merger. The trust or the 
establishment not harassed by strong competitors faces a strike 
more complacently than a small firm competing with many others. 
(1) It may prolong the struggle with little fear from competitors; 
and raise the price of the stock of goods on hand, or book orders for 
future delivery. (2) Or it may grant higher wages, and make the 
concession an excellent excuse for permanently raising the price of 
its products. Although the importance of the strike as a weapon of 
organized labor seems to have declined, the time has not yet ar¬ 
rived when labor can with safety give up the use of the strike unless 
the employer gives up the right of arbitrary discharge. 

The strikes occurring before the Civil War and even before the 
last decade or two were spontaneous outbursts and were conducted 
in an unsystematic manner. During the Civil War few, if any, 
sympathetic strikes occurred; and the employees in each shop 
usually resumed work when a satisfactory agreement was concluded 
with their employer irrespective of the situation in other shops. 
In recent years the strike has been “ commercialized”; it is now 
conducted in a systematic manner. Preparation is made for it in 
advance. Money is accumulated in the treasuries of unions and of 
employers’ associations for strike purposes. Picketing and boy¬ 
cotting are systematically carried out by the strikers; the em¬ 
ployers have their army of strikebreakers and spies. The strike 
of the first decades of the twentieth century is as different from that 
of 1835 as modern military tactics differ from tribal warfare. “The 
serious development of the century is the systematization of the 
boycott and the blacklist, the constant and fairly successful effort 
of trade unions and employers’ associations to improve and perfect 


COERCIVE METHODS 


171 

their respective weapons of coercion, to give them a legal status 
and transform them — as the relatively innocuous pool was trans¬ 
formed into the more menacing holding corporation — into lawful 
instruments which are doubly oppressive, because doubly efficient, 
by reason of their very validity. Both sides are incessantly 
planning to perfect and legalize coercion and monopoly.” 1 

A strike is essentially a class struggle; but the ethics of the strike 
are the ethics of war or of the feud. No matter whether the local 
police, state militia or constabulary, or the regulars of the United 
States army are used in maintaining order and in enforcing the law 
during a strike, the striking workers almost invariably feel that 
they are inequitably treated. The workers evidently reach the 
conclusion that the government does not adequately represent 
their interest in a time of industrial conflict. The editor of a well- 
known weekly advocates placing strike police under the control of 
a commission upon which both employers and employees are repre¬ 
sented. This step would tend to prevent the recurrence of the 
charge of prejudiced control over the guardians of law and order. 

Early strikes were initiated, controlled, and financed by locals. 
In harmony with the general trend toward centralization of control 
in labor organizations, the tendency has been to give the national 
officers more and more authority in regard to strikes. This trend 
is especially clear in organizations in which strike benefits are paid 
by the national body. Many national unions require the locals 
to make definite efforts to adjust the difficulty before applying to 
the national officers for sanction of a proposed strike. A repre¬ 
sentative of the national union is usually sent to the scene of the 
difficulty. 2 Sabotage is a sort of “diluted” strike; the men remain 
at work and receive wages, but reduce output, injure machinery, 
clog the transportation system, impair the quality of the product, 
or perform some other discreditable act for the purpose of harassing 
the employer. It is difficult to draw a line between the more passive 
forms of sabotage and restriction of output. In fact, both employ¬ 
ers and employees often practice the kind of sabotage which 
restricts output. Sabotage is advocated chiefly by radical unions; 
it is essentially the weapon of the slave or of the coward. A leaflet 

1 Adams, T. S., Publications of the American Economic Association, Feb., 

1906, p. 192. . 

2 Janes, G. M., The Control of Strikes in American Trade Unions. 


172 


LABOR PROBLEMS 


issued by the Industrial Workers of the World presents vividly the 
point of view of the radical in regard to sabotage. “Sometimes it 
is hard to avoid speeding up; sometimes it means that the in¬ 
dividual who resists the system will get fired. But it is an honor 
for a man who understands the situation to be discharged for loaf¬ 
ing. If you exercise a little ingenuity, if you set the pace, and talk 
sense to the rest of the workers on the job, you can do wonders in 
the way of curtailing production without getting discharged. If 
you can get all the men to drag back, the boss will not know whom 
to pick on.” Is this not what students euphoniously term “getting- 
by”? The filibuster is the senator’s method of sabotaging the 
legislative machinery. 

THE GENERAL STRIKE 

The general strike or “national holiday” is usually a weapon 
of the radicals in the ranks of organized labor. The aim is to tie 
up practically all of the work activities of a nation, a section of a 
country, or a city. Labor intends through the general strike to 
shut down industries and to allow only such to reopen as are 
essential to public health and safety. The general strike ordinarily 
is in essence a revolutionary activity. The success of a general strike 
would force the government as well as industrial enterprise to make 
terms with the strikers. The most famous general strike is the one 
which occurred in England in 1926. This grew out of the dispute 
in the coal mining industry. After eight days, the strike was called 
off without settling the difficulty in the coal mines. Two local 
“general strikes” occurred on the North American continent in 
1919, in Seattle and in Winnipeg. 1 The general strike may be 
used, as in Belgium in 1913, for political purposes. The workers 
attempted to end the system of plural voting which favored men 
owning property. 


THE BOYCOTT 

The boycott is a strike of the consumer. It may be divided into 
two classes: the primary or simple boycott, and the secondary or 
compound boycott. In the primary boycott, only the persons 

1 See Crook, W. H., The General Strike , for material in regard to the history 
of the general strike. 


COERCIVE METHODS 


173 


directly interested are involved. The members of a union may 
refuse to buy an article produced by a firm declared to be “unfair” 
to union labor. The term boycott usually refers to the secondary 
boycott which involves third parties who are not directly interested 
in the dispute. An attempt is made to influence the conduct of an 
employing firm by inducing individuals and groups not to patron¬ 
ize the former. Among the methods used in attempting to persuade 
the third party to boycott the offending employer are: a threat to 
stop patronizing the concern or to call a strike, refusal to work on 
non-union material, publishing unfair lists, and by the use of 
circulars or banners asking outsiders not to do business with the 
firm boycotted. If members of a union and their friends refuse to 
patronize a merchant who handles along with other merchandise 
the product of the boycotted manufacturer, the boycott is said to 
be secondary. Again, if the members of the union persuade or 
coerce others into refusing to buy the product of the boycotted 
manufacturer or of the merchant who sells the former’s goods, the 
boycott is secondary. The Court of Appeals of the District of 
Columbia defined the boycott as “a combination to harm one 
person by coercing others to harm him.” The secondary boycott 
may become one of the most cruel and indefensible weapons of 
organized labor. Some years ago a street car strike occurred in 
one of our industrial cities. Women who had ridden on street cars 
manned by non-union crews found it difficult to buy groceries and 
r iedicines in the section of the city in which they resided. Store¬ 
keepers were warned by watchful pickets not to sell to them under 
the penalty of a boycott. 

The success of a boycott depends upon the numbers and the 
solidarity of unionists and upon the opportunity to spread the news 
of the boycott far and wide. It has succeeded best when directed 
against articles of general use among the masses of the people, 
such as tobacco, baked goods, cheaper grades of clothing, and beer 
(in the days before prohibition). In the past, the Brewery Work¬ 
ers used this weapon effectively in several bitterly contested labor 
disputes. The boycott in their hands was such a powerful weapon 
that it reacted so as to increase the membership of the brewery 
workers’ union. Employers have in some cases urged the “ organi¬ 
zation” of their plants in order to avoid the effect of the boycott. 
As a consequence of this unusual situation the solidarity of the 


174 


LABOR PROBLEMS 


brewery workers was not as great as it would have been if the men 
had joined because they felt the necessity of organization. 

The boycott has often been used in controversies not involving 
the labor dispute. There have been consumers’ boycotts, trade 
boycotts, international boycotts, boycotts by farmers, by aboli¬ 
tionists, and by prohibitionists. The excommunication and the 
interdict of medieval times were forms of boycotting offenders. 
The unfair list is usually a list of manufacturers and dealers who 
are considered to be unfair to organized labor. The list is pub¬ 
lished in various labor papers. The intent is to warn the readers 
against purchasing the goods produced or sold by the firms in¬ 
cluded in the list. A fair list is the reverse of the unfair list. The 
fair list is not legally recognized as a form of the boycott. 

THE ATTITUDE OF THE COURTS TOWARD STRIKES 
AND BOYCOTTS 

The foundations of the English common law which our ancestors 
brought with them across the Atlantic were laid generations before 
unions and their weapons — the strike and the boycott — came 
into existence. The common law deals with the relations be¬ 
tween individuals. After associations and combinations such 
as unions developed, the courts experienced difficulties in apply¬ 
ing the common law to cases involving groups and group action. 
A labor organization has for its prime purpose collective bar¬ 
gaining. Unless the importance of collective bargaining and of 
group action is understood by the court, many forms of union 
activity in a time of stress seem undesirable or anti-social. Whether 
the sympathetic strike or the boycott, for example, is held to be 
reasonable and lawful or unreasonable and unlawful, is often 
determined by the attitude taken toward collective bargaining. 
American courts are not as yet in agreement as to the legal status 
of the strike, picketing, and the boycott. A labor organization, 
being a combination of individuals having labor power to sell, is 
“at the mercy of the social theories of the particular court of trial,” 
when bargaining fails and the union resorts to coercive measures. 
The rights of wage earners collectively to quit work, to picket the 
establishment of their employer, and to boycott the products of his 
establishment encounter two important obstacles in the courts: 


COERCIVE METHODS 


175 

(1) Such acts may be declared to constitute a conspiracy under the 
common law or an interference with private property rights; or 

(2) they may be declared to constitute interference with interstate 
commerce and to be illegal under statute law. Perhaps the most 
commonly accepted definition of a conspiracy at common law is 
that “a conspiracy must be a combination of two or more persons, 
by some concerted action, to accomplish some criminal or unlawful 
purpose, or to accomplish some purpose not in itself criminal or 
unlawful, by criminal or unlawful means.” The English common 
law regarded combinations of labor attempting to raise wages as 
criminal conspiracies. In England, however, statute law has freed 
labor organizations from this restriction. In the United States, 
there never has been complete acceptance of the legal theory that a 
labor union was a conspiracy; but on the other hand, “labor has 
never gained complete relief from the conspiracy doctrine.” 1 Fur¬ 
thermore, the legal doctrine of conspiracy is based on the notion 
that there may be an element of menace in group action which 
does not appear in the acts of a number of unrelated individuals. 
According to the theory of conspiracy, acts which are lawful when 
performed by an isolated individual may become unlawful when 
performed by a group acting in concert. The legality of a strike 
depends therefore upon how it is conducted. This in turn goes back 
to motives, good or malicious. In all this, the judgment of the 
court is the deciding factor. 

The general rule under the common law is, briefly stated, that 
strikes are lawful if the purpose is primarily to improve the working 
conditions. If the primary purpose is to injure the employer, that 
is, if the intent is malicious, the strike is illegal. All strikes may 
cause the business of the employer to be injured, but if the injury 
is a secondary or incidental result of the strike it is generally held 
to be a lawful exercise of the rights of a combination of wage 
earners. The determination of the intent is often extremely diffi¬ 
cult. A strike is more than quitting work. It often involves an 
attempt, through the use of picketing, to prevent the employing 
concern from obtaining new employees in place of the strikers. 
The strike and the boycott are directed against the business of the 
employer. His physical property is rarely destroyed; but his 

1 Commons, J. R., and Andrews, J. B., Principles of Labor Legislation, rev. 
ed., p. 102. 


176 


LABOR PROBLEMS 


business, his income, and his labor and commodity markets are 
adversely affected. It is upon this intangible, the right to carry on 
business without interference, that court attitudes hinge when 
called upon to decide the legality of a strike or of a boycott. The 
right of the strikebreaker to work is also a factor in the eyes of 
the court. The right of the workers to strike and to picket appears 
to menace the rights of the strikebreaker and the rights of the 
employer to do business. In the case of a boycott, the employer 
argues that the use of this weapon by organized labor violates his 
right to use his own property without interference and to manage 
his business without coercion or intimidation. The labor organiza¬ 
tions urge that their members are merely exercising their con¬ 
stitutionally guaranteed rights of free press and free speech. The 
strike and the boycott cause a conflict of rights which the courts 
find difficulty in harmonizing. 1 It should be noted that the right 
to do business is not an absolute right. It is often interfered with 
by sanitary regulations and other forms of the police power. In 
time of war, the right to do business may be nullified. Railways 
and other public utilities have had their rights to do business 
seriously circumscribed. In short, the right to do business is legally 
recognized only in so far as its exercise is in the public interest. 

Strikes carried on solely for the purpose of affecting the rate of 
wages or the length of working day or week are legal unless in the 
special cases of public employees or possibly employees of certain 
public utilities. The sympathetic strike is probably unlawful. 
The courts are not easily convinced that the. interest of working¬ 
men in one establishment in the affairs of those in another estab¬ 
lishment is sufficiently direct and immediate to warrant an addi¬ 
tional strike which interferes with business and adversely affects 
the welfare of the community. As a rule, a strike to cause the dis¬ 
charge or to prevent the employment of non-union men or to pre¬ 
vent the use of non-union material is held to be unlawful. A 
strike for the purpose of aiding a fellow worker to collect a pay¬ 
ment of money is not permissible. There is “no absolute right 
to strike.” In public utilities, continuity of service is of vital 
importance to the general public; the managers of a public util¬ 
ity are obligated to furnish continuous service. A strike makes it 
difficult for a public utility to function. The right of workers to 
1 For a further discussion of rights, see chapter on Labor Legislation. 


COERCIVE METHODS 


177 


quit work individually or collectively runs counter to the duty 
of furnishing continuous service. To date, the right of workers 
in public utilities to strike has been modified only in minor mat¬ 
ters. It is not lawful for a railway employee to abandon his 
engine while en route to its regular destination. Employees while 
remaining in the service are required to perform their regular 
services. A refusal, for example, to haul the cars of another com¬ 
pany in order to give assistance to strikers is unlawful. The railway 
and public service corporations of various sorts are peculiar in¬ 
dustries. The welfare of the general public is seriously affected by 
any long-continued interruption of the service. The growth of 
trusts which control the necessities of life is pushing them into the 
same category. The attitude of the public and of the courts toward 
strikes in those industries will be modified because of the far- 
reaching effect of a labor dispute. Advocates of compulsory ar¬ 
bitration in particular industries are not lacking. It is urged that 
a group of employees must give up their right to strike in the in¬ 
terests of the larger group — the general public. 

Except in the case of highly skilled men or an all-inclusive trade 
union, a strike in which the workers merely quit and retire to 
their homes without making any attempt to give publicity to 
their grievances or to dissuade others from taking the places the 
strikers have vacated would, as a rule, be a failure. New workers 
would presently be hired and the plant, after a period of adjust¬ 
ment, would be operated normally. In nearly every strike, the 
strikers take concerted action to prevent the employing firm from 
obtaining a new working force. As has been indicated, questions 
affecting the right to strike frequently hinge upon the matter of 
what steps are allowed in order to retain the positions vacated. 
One of the means employed is picketing. A selected group of 
strikers or all of them are stationed near the establishment of 
the employer for the purpose of persuading or coercing non¬ 
union men from taking the places of the strikers. Occasionally 
the pickets walk back and forth in front of the establishment 
carrying banners or placards indicating that a strike or a boycott 
is being conducted. Peaceful picketing is lawful under the com¬ 
mon law. As a matter of actual practice, picketing is frequently 
deemed unlawful by the courts. The courts hold that picket¬ 
ing almost inevitably involves physical intimidation and fear. 


LABOR PROBLEMS 


178 

In the language of the court, “there may be threats, intimidations, 
molestations, and obstructions, without there being any express 
words used by which a man could show violent threats toward 
another or any express intimidation.” The courts recognize that 
picketing almost inevitably creates “an atmosphere unsuited for 
‘scabs.’” Everybody familiar with actual strikes knows that 
moral suasion at the factory door rarely brings results, and in re¬ 
sults the strikers have direct and immediate interest. In short, 
peaceful picketing is a rare phenomenon. 

In the matter of picketing, two rights come into direct conflict: 
(1) the right of an employer to conduct his business without inter¬ 
ference and without intimidation of his employees or customers by 
outsiders or strikers, (2) the right of strikers and others to persuade 
strikebreakers not to work for the employer or of customers not 
to buy from the firm as long as the strike continues. Prior to 1921, 
the courts differed very materially in their attitude toward picket¬ 
ing. In that year, the Supreme Court of the United States handed 
down two decisions relating to picketing which have partially 
clarified the situation. In the American Steel Foundries vs. the 
Tri-City Central Trades Council, the court held that when picket¬ 
ing was carried on by a group, it was “inconsistent with peaceful 
persuasion” and “constituted intimidation.” The court further 
held that the strikers should be limited to one picket for each place 
of exit and that such representatives must not use “abusive 
libelous or threatening” appeals and must not “obstruct an un¬ 
willing listener by importunate following or dogging his steps.” 
This was not intended by the court to constitute “a rigid rule”; 
judges should take into account the particular conditions in each 
case. 1 In the case of Truax vs. Corrigan, the court held that picket¬ 
ing by groups of strikers “violates a constitutional guarantee of lib¬ 
erty and property and that no state can legalize such conduct. ” 2 
In 1926 an Ohio Court of Appeals denied an injunction against the 
picketing of a restaurant in Cleveland. In this case, cards were 
distributed by the pickets. The court held that no person had 
been abused or intimidated. 3 The British law of 1927 limits picket¬ 
ing when conducted on such a scale as to constitute intimidation. 

1 Bulletin of the Bureau of Labor Statistics, No. 309, pp. 181-187. 

2 Commons, J. R., and Andrews, J. B., Principles of Labor Legislation, p. 121. 

3 Bulletin of the Bureau of Labor Statistics, No. 517, pp. 158-159. 


COERCIVE METHODS 


179 


The legal status of the boycott is not fixed beyond controversy. 
The decisions are somewhat conflicting. Under the common law 
the legality of the boycott, like that of the strike, depends upon the 
intent. If the intent is malicious, the boycott is held to be unlaw¬ 
ful. Many states have statutes referring to the boycott by name 
or by implication. Boycotts have been declared illegal in the 
federal courts under antitrust legislation and the Interstate Com¬ 
merce Act. In the Danbury Hatters case, for example, a labor 
organization was penalized under the Sherman Anti-Trust Act for 
interfering with interstate commerce by means of a boycott. A 
distinction is usually drawn by the courts between the primary and 
the secondary boycott. The primary boycott is legal unless ac¬ 
companied by coercion; but as a weapon of organized labor it is 
unimportant. The secondary boycott is usually held to be illegal. 
Nearly all legal decisions in boycott cases relate to some form of 
the secondary boycott. A decision of the Supreme Court of 
California clearly breaks away from the mass of legal precedents. 
The court declared as do labor leaders generally that the distinction 
between the primary and secondary boycott was immaterial. The 
boycott was declared to be legal as long as the union used fair 
means to induce third parties to cease patronizing the boycotted 
firm. It is interesting to note that in California the early use of the 
boycott was against Chinese-made goods. Other courts held that 
the presence or absence of threats and coercion is the determining 
factor. It has been held in certain cases that the secondary boycott 
interfered with the business of the boycotted firm and that the 
right to do business is a property right. The Duplex Printing 
Press Company was the maker of newspaper printing presses. 
After a strike of machinists in its plant, a country-wide program 
was followed for the purpose of inducing other workers not to haul, 
install, or repair the presses made by this firm. The Supreme Court 
of the United States declared this method of boycotting illegal 
because the interstate business of the firm was threatened with 
irreparable damages. 1 The Bedford Cut Stone Company case 
indicates that it is illegal for labor organizations to refuse to work 
upon materials made or handled by non-union labor. 2 The court 
held that this boycott indicated a course of conduct which threat- 

1 Law and Labor , Jan., 1921; 254 U. S. 443. 

2 Bulletin of the Bureau of Labor Statistics , No. 517, p. 163; 274 U. S. 37. 


i8o 


LABOR PROBLEMS 


ened to interfere with “the natural flow of interstate commerce.” 
In the famous Bucks Stove and Range Company case, the unfair 
list was held to be unlawful. The officers of the American Federa¬ 
tion of Labor were ordered to cease printing the name of this firm 
in the “We don’t Patronize” column of their official journal. 

The legality of the secondary boycott and the unfair fist also 
hinges upon another disputed point. May an act which is lawful 
when performed by one individual become unlawful when per¬ 
formed by a group of persons acting in a concerted manner? Chief 
Justice Shepard of the Supreme Court of the District of Columbia 
in a dissenting opinion in the Bucks Stove and Range Company case 
held that the provisions of the English Trades Disputes Act of 1906 
were now generally accepted as the common law doctrine in this 
country. This act changed the law of conspiracy in that country 
so that no action would stand against a combination performing 
acts which are legal if performed by an individual. 1 In June, 1908, 
the Supreme Court of Montana rendered the following opinion: 
“But there can be found running through our legal literature many 
remarkable statements that an act perfectly lawful when done 
by one person becomes, by some sort of legerdemain, criminal when 
done by two or more persons acting in concert, and this upon the 
theory that concerted action amounts to conspiracy. But with 
this doctrine we do not agree.” 2 Other eminent legal authority 
may be found accepting a very different doctrine. Justice Holmes 
and Justice Harlan of the United States Supreme Court have 
indicated in decisions that concerted efforts may be adjudged un¬ 
lawful although the same act performed by one person may be 
recognized as lawful. 3 Labor leaders insist that mere numbers do 
not affect the quality of an act. If it is lawful for one man to 
withhold his patronage from a dealer and to advise his friends to do 
likewise, they urge that a group of men have the same rights. The 
opposing legal opinions seem to be influenced by the idea that the 
mere force of numbers introduces an element of menace and coer¬ 
cion absent in the case of a single person; and that an “un- 

1 In 1927, the Act of 1906 was amended. Intimidation and the general 
strike were declared illegal. 

2 Lindsay & Co. vs. Montana Fed. of Labor. See Political Science Quarterly , 
Vol. 24, p. 86. 

3 See Bulletin of the Bureau of Labor Statistics, No. 74, pp. 250-251; also 
no Wisconsin, p. 189. 


COERCIVE METHODS 


181 


warranted interference with the natural course of trade” may 
follow. A resolution adopted in 1905 by the American Federa¬ 
tion of Labor furnishes a reasonable basis for such an opinion. 
“We recognize the fact that a boycott means war, and to success¬ 
fully carry out a war we must adopt the tactics that history has 
shown are most successful in war.” 

The usual remedy of the courts in the case of a decision against 
the boycott or the unfair list is the injunction. The use of the 
injunction is a conspicuous factor in legal proceedings in connection 
with labor disputes. In labor cases, an injunction is a writ issued 
by a court exercising equity jurisdiction, ordering certain persons 
to refrain from doing specified acts. Under common law procedure, 
reparation may be sought after an overt act involving damages to 
person or property has occurred. The common law is highly 
technical; it is difficult for the courts to allow for unusual or ex¬ 
tenuating circumstances. In the early English law, the king was 
given power to grant extraordinary relief. Later this power 
devolved upon a special kind of court called the court of equity. 
The injunction is supposed to be granted by equity courts only in 
case irreparable damages are likely to follow the commission of the 
enjoined act — that is, damages which cannot be adequately paid 
for through a judgment obtained in the ordinary law courts. The 
injunction is a preventive measure. The persons threatening to 
injure the person or property of the complaining party are ordered 
not to commit the overt act. A violation of this order may be 
punished as contempt of court by fine or imprisonment or both. 
Except as modified by statute law, trial by jury is not allowed in 
contempt of court cases. The judge issues the order, determines 
whether the order has been disobeyed, and fixes the penalty for 
disobedience. The executive and the legislative branch have prac¬ 
tically been stripped of the power to inflict punishment upon those 
who disobey their mandates but the judicial arm of government 
still clings to that right. 

The most famous cases of the use of the injunction in labor dis¬ 
putes are the Debs case in connection with the railway strike of 
1894, the Bucks Stove and Range Company case in which three 
high officials of the American Federation of Labor Samuel 
Gompers, John Mitchell, and Frank Morrison were sentenced 
to imprisonment for disobeying the orders of the court, and the 


182 


LABOR PROBLEMS 


Railway Shopmen’s Strike of 1922. The first originated in the 
works of the Pullman Car Company and spread as a sympathetic 
strike to nearly all the railway lines radiating from Chicago. The 
general public was greatly inconvenienced, interstate commerce 
was interfered with, and the mails were delayed. Much violence 
and destruction of property accompanied the strike. A “blanket” 
injunction was issued by a federal court enjoining the officers of 
the American Railway Union and “all other persons” from inter¬ 
fering with the transportation of the mails and with the flow of 
interstate commerce. Disobedience of this inclusive order was 
punishable as contempt of court. Interference with the transporta¬ 
tion of the United States mail is a crime under the federal statutes, 
but the accused under the statute law would be allowed a trial by 
jury. 

The Bucks Stove and Range Company became involved in a 
dispute with the molders employed by the company. A strike 
followed and a boycott was instituted against the products of the 
company. The American Federationist , the official organ of the 
American Federation of Labor, included the name of this firm in its 
“We don’t Patronize” list. It was held that the officials and 
members of the Federation had acted concertedly against the 
company for the following purposes: (1) to bring about a breach 
of the company’s contracts with others; (2) to deprive the company 
of property [good will in business] without due process of law; 
(3) to restrain trade among the several states; and (4) to restrain 
commerce between the several states. (1) and (2) were held to 
constitute conspiracy under the common law; and (3) and (4) to 
be actionable under the statute law — Sherman Anti-Trust Law 
and interstate commerce acts. A sweeping injunction was granted 
in the courts of the District of Columbia forbidding the officers and 
agents of the Federation from interfering in any way with the 
business of the company; from printing and distributing copies of 
The American Federationist or any printed or written instrument 
“which shall contain or in any manner refer to the name of the 
complainant, its business, or its product in the “We don’t Patron¬ 
ize” or the “Unfair” list; from calling attention “in writing or 
orally” to the boycott against the firm. Three officers of the 
Federation were declared to have violated the injunction and were 
sentenced to imprisonment for terms of one year, nine months, and 


COERCIVE METHODS 


183 

six months respectively. This judgment was reaffirmed by the 
Circuit Court of Appeals, although the terms of the injunction were 
slightly modified. One judge dissented. 1 

The injunction issued by a federal court in the Shopmen’s Strike 
was extraordinarily sweeping and drastic in its terms, with the 
multiplicity of verbiage dear to the heart of the lawyer. This 
injunction enjoined persons from “in any manner interfering with, 
hindering, or obstructing” the railways or their employees. The 
New York Times , in commenting upon this far-flung blanket in¬ 
junction, insisted that strict obedience to its terms would condemn 
the strikers “to a life of silent meditation and prayer.” This 
injunction, like others, generated a large amount of ill will; but the 
goodwill of employees is a very valuable asset of American railways 
and other corporations. Injunctions do not remove the irritations 
which lead to strikes and sabotage. A few injunctions have been 
issued at the behest of organized labor enjoining employers from 
breaking contracts or following some other course of action which 
it is alleged would cause irreparable damages to the union. 

Injunctions of recent date are more far-reaching and compre¬ 
hensive than the injunctions issued in the eighties and nineties of 
last century. In the case of the Shopmen’s Strike, nearly all of the 
two hundred sixty-one railways of Class I applied for injunctions. 
“No applications were denied. In all, nearly three hundred were 
issued.” 2 Organized labor bitterly opposes this frequent use of the 
injunction; it objects to the substitution of equity procedure for 
resort to the courts of common law. The spokesman of organized 
labor urged that the equity courts have overstepped their authority 
in issuing injunctions in labor cases. Legislation curbing the power 
of equity courts in this matter has for years been vigorously urged 
by unionists. 

The injunction is extremely important because it involves (1) a 
denial of the right to trial by jury in case the injunction is dis¬ 
obeyed. The frequent resort to the injunction gives ground for the 
suspicion that the injunction is often merely a subterfuge for avoid¬ 
ing a jury trial. (2) It led in the Bucks Stove and Range Company 
case to an apparent denial of the right to print certain facts, thus 

1 After a long period of litigation this case was dismissed by the Supreme 
Court upon a technicality. 

2 Former Senator Pepper, American Labor Legislation Review , Dec., 1924, 
P- 3*9- 


184 


LABOR PROBLEMS 


interfering with the freedom of the press guaranteed by the first 
amendment to the ^federal Constitution. (3) The constitutional 
right to freedom of speech is also apparently denied in certain cases. 
The court’s answer to this plea that the constitutional guarantee of 
freedom of press and speech is impaired, is as follows: “ What¬ 
ever in writing, print, or speech violates a legal right of another is 
unlawful,” . . . consequently, “ it ought to be enjoined in advance, 
if ... it so invades rights of property as that the law affords no 
remedy adequate to compensate for the results,” or if a good name 
may be “rescued from preconceived despoilment.” 1 (4) In the 
fourth place, it is generally conceded that a business may be law¬ 
fully injured by competition, or by the exposure of facts relating 
to the conduct of the enterprise. It is not, however, beyond the 
bounds of reason to inquire: Do the decisions in the boycott cases, 
known as the Bucks Stove and Range Company case and the 
Danbury Hatters case, indicate that the exposure of facts as to a bus¬ 
iness may be adjudged unlawful? Has a person or a combination 
of persons the lawful right to make public the fact that conditions 
in a factory or a store are insanitary? The business will be injured 
and the flow of interstate commerce may be modified. If a true 
statement is sent broadcast that a grocer doing an interstate busi¬ 
ness keeps whiskey for sale in his basement or that he mixes sand 
with the sugar which he offers for sale, could the grocer obtain an 
injunction restraining the circulation of such statements? 

Temporary injunctions are often issued upon the complaint of 
one party and without a hearing to both sides of the case. Later, 
after a hearing, the injunction may be made permanent or it may 
be withdrawn. If the injunction is not allowed, irreparable dam¬ 
ages are claimed to be probable. If the injunction is allowed, the 
strike or the boycott may fail. Even a temporary injunction delay¬ 
ing the use of such weapons as picketing or boycotting may cause 
a strike or a boycott to fail. Time is often an important factor in 
the success or the failure of a strike. An injunction against a labor 
group unwisely granted may result in irreparable damage to the 
cause of the workers. On the other hand, one unwisely refused 
may cause irreparable damages to the employer group. The 
judge is in a difficult position when asked to grant an injunction in 
an important labor dispute. His interests, training, associations, 

1 Bulletin of the Bureau of Labor , No. 80, p. 137. 


COERCIVE METHODS 185 

and philosophy of life will in the main determine the attitude he 
assumes. 

The Clayton Act, passed in 1914, contains certain clauses relating 
to labor which it was expected would improve the legal status of 
organized labor. Labor leaders have insisted that labor is not 
a commodity, that a labor organization is not a trust, and ac¬ 
cordingly labor organizations ought not to be attacked under the 
antitrust laws. The Clayton Act specifically states that the 
“ labor of a human being is not a commodity or article of com¬ 
merce.” The power to issue injunctions in case of labor disputes 
was supposed to be circumscribed by the Act. Among other things, 
no person or persons shall be restrained by injunction “from doing 
any act or thing which might lawfully be done in the absence of 
such dispute by a party thereto.” The Clayton Act granted the 
privilege of a trial by jury in contempt of court cases arising in 
federal courts. With the exception of the provisions in regard to 
jury trial, interpretation by the courts of the portions of the Act 
relating to labor indicates that the legal status of labor was un¬ 
changed by this piece of federal legislation. In 1931 organized 
labor sponsored an anti-injunction measure which provided that no 
federal court may issue an injunction for the purpose of prohibiting 
a strike or picketing unless violence is used, workers from joining 
a union, the use of union funds for the benefit of members, the 
publication of the sentiments and views of striking workers, or 
workers from assembling peaceably. This measure was placed on 
the federal statute books in 1932. Twelve states have also enacted 
anti-injunction laws. 1 


THE BLACKLIST 

An association of employers may prepare and circulate a list of 
employees who have gone on a strike or who have been discharged 
because of activity in labor organizations. The blacklist need only 
be circulated or available among a select list of employers. The 
boycott on the contrary depends for its success upon publicity, 
upon the unity of action on the part of a large number of pur¬ 
chasers. It is often difficult to prove the existence of a blacklist in 
court; but the boycott is always in the open. Many plausible 

1 Monthly Labor Review, July, 1932. 


i86 


LABOR PROBLEMS 


reasons may be given for the discharge of an employee; and the 
right to discharge for a good, bad, or indifferent reason is practically 
established. Furthermore, a prospective employer of a given in¬ 
dividual has the right to look up the latter’s record with previous 
employers. A federal statute forbidding an employer engaged in 
interstate commerce to discharge an employee because of member¬ 
ship in a union was declared unconstitutional. The court also 
ruled that an employer has a right to keep a book containing the 
names of employees discharged because of membership in a union, 
and that he may lawfully invite inspection of the book by other 
employers. Legislation against the blacklist has proved to be 
futile. 


THE UNION LABEL 

The union label is a mark adopted by a labor organization and 
placed upon the products made by its members. Its use furnishes 
an easy method of discriminating between union-made goods and 
the products of non-union, child, or convict labor. Through the 
use of the union label the wage earners are organized as consumers 
as well as producers. The wise use of the consuming power by 
the families of union men will hasten the growth and increase the 
efficiency of organized labor. The workingmen form a very im¬ 
portant class of consumers. By directing their demands into proper 
channels, conditions of labor may be greatly ameliorated. The 
demand for the product of the workers in a trade depends upon the 
wages and conditions in other trades. If the workers in one trade 
persist in purchasing goods which are produced under sweated or 
“unfair” conditions, the consuming power of the workers in the 
sweated trades is reduced. As a result, the demand for the products 
of the workers in the first trade is also reduced, and they are in¬ 
directly, but none the less surely, made to feel the results of their 
own short-sighted action. It has often been stated that “half of 
the battle of union labor would be won if only the union man and 
his wife would in every instance insist on the label on everything 
they purchase.” Another argument is used for the purpose of reach¬ 
ing a wider circle of consumers. It is maintained that union-made 
goods are produced under sanitary conditions and will not carry 
infectious diseases. 


COERCIVE METHODS 


187 

Labor organizations have not as yet effectively utilized their 
latent power in this connection. The members of labor organiza¬ 
tions could do much toward preventing scamping and adulteration. 
The powerful unions in the building trade might do much toward 
preventing violations of the building laws in cities. The wage 
earners live in many buildings which are improperly constructed, 
and often pay the penalty for faulty construction. The producer 
— the workman — by neglecting to oppose bad work injures his 
brother unionist who consumes the product. The consumer of 
almost any product is obliged to grope in the dark in regard to the 
quality of his purchases. His dependence upon the word or the 
reputation of the maker or the seller is often almost complete. If 
the union label always stood for good workmanship, quality as 
represented, and obedience to legal requirements, it would come 
to the consumer as a welcome ray of light through the darkness of 
uncertainty and misrepresentation. It would not be impossible to 
make the union label “organized labor’s most powerful weapon.” 
Organized labor might furnish an effective check upon certain 
varieties of graft, as, for example, in connection with public or 
private buildings. Graft is primarily a disease of the commercial 
world, the world of buying and selling, as distinct from the world of 
production. 

The union label originated in the United States; and its use is 
almost entirely confined to this country. It was first used by the 
cigar makers in 1874. The opposition to cheap labor seems to 
have been a factor in causing its adoption. Many trades now use 
the label. In 1930 fifty-one labels and ten cards were issued by 
organizations affiliated in the American Federation of Labor; and 
one of the four departments of the Federation was the Union Label 
Trades Department. It has been difficult to interest workers and 
their families in union-label goods. Repeatedly in labor conven¬ 
tions, complaint is made that unionists are not exclusively pur¬ 
chasing union-made goods. The attraction of the bargain counter 
is almost irresistible. A committee on union labels declared that 
“we cannot too strongly impress upon our fellow-workers the need 
of a continual and persistent demand for union-made goods. 
Union labor is morally bound to support union labor, and one of 
the most practical ways to do this is to spend money earned under 
union conditions only for commodities made and distributed under 


i88 


LABOR PROBLEMS 


union conditions. Be consistent and practice what you preach.” 
The union label is legally not a boycott. It is one variety of the 
fair list and its use is lawful. 

REFERENCES 

Adamic, L., “Racketeers and Organized Labor,” Harper’s Magazine , 
Sept., 1930; “ The Papers Print the Riots,” Scribner’s Magazine , Feb., 
1932 

Atkins, W. E., and Lasswell, H. D., Labor Attitudes and Problems, 
PP-351-362 

Berman, E., Labor and the Sherman Act 
Crook, W. H., The General Strike 

Frankfurter, F., and Greene, N., The Labor Injunction 

Frey, J. P., The Injunction 

Furniss, E. S., Labor Problems , Chap. 12 

Hiller, E. T., The Strike 

Mason, A. T., Organized Labor and the Law 


CHAPTER XI 


SCIENTIFIC MANAGEMENT 

WHAT IS SCIENTIFIC MANAGEMENT? 

In past generations, work was not carefully planned. It was 
performed as it had been done in the past, or as the result of some 
accidental discovery of a new method. Until recent centuries 
the rank and file of manual workers were slaves and serfs. The 
men of other classes did not see any pressing reason for studying 
methods of doing work; and, until the development of science in 
recent generations, no adequate foundation existed for a study of 
the ways and means of producing commodities. Accuracy, inter¬ 
changeability, and design are comparatively new elements in in¬ 
dustry. The familiar story of John Fritz, who only about half a 
century ago drew designs for steam engines with his cane in the 
sand on the foundry floor, is illustrative of the hit-and-miss methods 
generally used in our workshops of two generations ago. Each 
workman employed the methods he had learned from others, and 
met new situations as they arose, according to his own ideas or 
lack of ideas. 

Scientific management signifies the development of a scheme of 
operation resting upon certain definite principles, and independent 
of the whim of any man or set of men; “decisions are based upon 
facts.” It takes the determination of the particular methods to 
be employed out of the control of the worker and places it in the 
planning room. Scientific management uses time and motion 
studies, splits an intricate task into simpler tasks, and makes it 
possible for these fragments of a job requiring not easily attained 
skill to be performed well by selected workers after a brief period 
of training. It also means the introduction of some variety of 
piece work in order to reduce the amount of loafing on the job. 
The principles of scientific management may be reduced to “analy¬ 
sis, standardization, incentive.” In brief, it is getting the qualified 

189 


LABOR PROBLEMS 


190 

worker to use the appropriate tool in the right manner. The 
introduction of the blueprint was a preliminary step toward scien¬ 
tific management. The workmen were given definite directions in 
regard to many details of their work; decisions were made in the 
drafting room. Scientific management now carries the control 
and direction of workers several steps farther. 

Industry may be studied from the technical or from the human 
side. Industrial experts have devoted much attention to the study 
of materials and machines, but unfortunately until quite recently 
only a minimum of attention has been directed toward the investiga¬ 
tion of the most important factor in production — men and women. 
In the words of another, “man is on the way to master inanimate 
things, but hitherto the failure has been in treating human beings 
too much like things.” Wage workers have been treated as ma¬ 
chines, as hands, as “cannon fodder.” One of the economic prob¬ 
lems of today is that of releasing effectively and regularly the 
productive energy of human beings and of groups of associated 
workers. Few individuals work up to their possibilities and rarely 
are groups of individuals properly and harmoniously coordinated 
for the most effective results. Factories are filled with wage 
workers, but what is needed is an efficient and eager working force. 
There are much latent talent and energy in the mass of breadwin¬ 
ners which are rarely utilized in productive industry. Our participa¬ 
tion in the World War partially revealed America’s “tremendous 
dormant industrial capacity.” The older form of scientific manage¬ 
ment of which the greatest exponent was the late F. W. Taylor, 
“the father of scientific management,” laid the emphasis upon the 
mechanical elements involved. The more recent type stresses the 
human side of industry. The worker is studied as a human being 
rather than as a machine; it is recognized that physiological, 
psychological, and social problems are involved in any study of 
industrial efficiency and management. 

The older form of scientific management was interested (1) in 
the systematization of the work in a given factory from the engineer¬ 
ing or the mechanical point of view — the routing of the work, 
proper cutting speeds, the care of tools and machines, and the 
like. (2) The second concern of scientific management was with 
wages or the appropriate methods of paying for labor power. 
The newer form of scientific management, called by sundry names 


SCIENTIFIC MANAGEMENT 


191 

such as human engineering, personnel management, or organiza¬ 
tion engineering, no longer looks upon the worker as a form of 
machinery; it recognizes that workers are of infinite variety and 
should be studied as clinical cases. Psychological and sociological 
factors are not overlooked. What are the effective methods of 
energizing the workers as individuals and as members of a group? 
How may potent incentives which will stimulate sustained in¬ 
terest in the work of the industry be uncovered and utilized? 
The older form of scientific management was comparatively simple; 
but it could not be successfully carried out if it encountered oppo¬ 
sition from the workers individually or as a group. Since technical 
improvements in machine-shop methods increase the per-capita 
output of wage earners, these scientific methods will doubtless 
be introduced, as were machines, in spite of opposition. Efficient 
methods of doing work will sooner or later displace less efficient 
methods as, for example, the steamboat, the automobile, and the 
giant drop-hammer have displaced the sailboat, the horse, and the 
village blacksmith. The transformation may be retarded; but 
the constant pressure of economic forces will finally break down all 
opposition. 

The pioneers in scientific management did not entirely neglect 
the human side. The late F. W. Taylor wrote: “This close, 
intimate, personal cooperation between the management and the 
men is of the essence of modern scientific or task management.” 
But he apparently expected this cooperation to be brought about 
by the application of technical methods, by attention to the non¬ 
human side of industry. This part of the program cannot be 
secured by coercion; it can be effectively carried out only when the 
wage earners harmoniously cooperate with the management in 
working out the proposed plan. The fundamental problems of 
management engineering center at the present time around the 
treatment of wage workers. The relations existing between man¬ 
agement and men are of greater significance than those of cost 
accounting or of the selection and care of machines and tools. 

In theory, according to its advocates, scientific management 
stands for increased productive capacity without increased effort; 
it aims to do away with lost motion and useless movements. It 
means maximum results with a minimum of effort; it does not 
connote “frenzied production.” Now, these objects are certainly 


102 


LABOR PROBLEMS 


worthy of approval, and, consequently, opposition to efficiency 
engineering must arise because of the methods employed in carrying 
out the program. Our attention evidently must be directed toward 
this pertinent inquiry: How, then, can this “close, intimate, 
personal cooperation” be secured? 


THE ORIGIN OE SCIENTIFIC MANAGEMENT 

As F. W. Taylor is known as the chief exponent of scientific 
management, some attention may well be given to his experiments 
and program. Taylor was born in 1856 and died in 1915. His 
chief work was done with the Midvale Steel Company, 1878-1890, 
and with the Bethlehem Steel Company, 1898-1901. Taylor 
looked for a scientific method of doing each sort of work. There 
is a correct and efficient way of doing any kind of task whether 
it be tying a necktie or shoveling coal, or performing the more 
intricate process of cutting steel or building a bridge. The first 
problem in connection with any process is to find the “one best 
way” of doing the job. The second step is to select and train 
workers to do the work according to the best method. Taylor 
would give to each worker each day a job for which he is well suited, 
and give him a tool or machine which will enable him to do his 
biggest day’s work. In a plant adopting scientific management 
it is necessary for each worker “to abandon his individual ways 
for scientific, and to stop acting capriciously and arbitrarily and 
subscribe to a reign of law.” 1 Taylor emphasized what has been 
aptly termed “the discipline of science.” From his point of view, 
scientific management was “a mode of using equipment which is 
scientifically designed.” 

Two of his early experiments were with handling pig-iron and 
with the art of shoveling. In the case of workers carrying pig-iron 
into a box-car, the rest period was introduced. In studying shovel¬ 
ing, the preliminary question was: What is the proper shovel load? 
What load will give the greatest output per day? After consider¬ 
able experimentation, it was decided , that 2ii pounds constituted 
the proper load for the old-fashioned hand-shovel. The next 
problem was to design shovels for different kinds of materials so 
as to obtain the correct shovel load. Finally, it was necessary to 
1 Copley, F. B., Frederick W. Taylor , Vol. 2, pp. 61, 150. 


SCIENTIFIC MANAGEMENT 


193 

make proper selection of men for this work and to train them in 
regard to the best methods. 

In selecting workers for the original tests, Taylor would call in 
one or more men who seemed adapted to the work. He would say 
to the men: “You fellows are first-class men. We want to pay 
you more wages. If you will follow directions and play fair with 
us, we will pay you double wages.” This emphasis upon good 
work and high wages led in most cases to willing cooperation in 
the tests. Much more elaborate investigations were made in 
other lines. Taylor’s work in the art of cutting metals was highly 
important. One enthusiastic engineer, H. R. Towne, declared: 
“Under the magic influence of Frederick W. Taylor’s genius, the 
art of cutting metals, which underlies all the metal industries, made 
a greater advance than during the previous ages since the days of 
Tubal Cain.” 1 

Under scientific management, little is left to the initiative of 
the worker. For example, it is urged by its advocates that the 
worker’s initiative and knack would not have brought about the 
use of the proper kind of shovel with the exact load for most efficient 
results. The management becomes responsible for the machines 
and tools used, for the methods of work employed, and for the 
proper selection of workers. The speed of the machine, the kind 
of tool and the methods of sharpening it, the depth of cut, the 
motions used by the operator, and the position of the raw material 
and of the finished product are all determined after careful in¬ 
vestigation by representatives of the planning room. Through 
use of the stop watch, by means of motion study, and by other 
applications of the scientific approach, a science is developed for 
each element of a man’s work. Guesswork, rule-of-thumb, or 
tradition has no place in a plant under scientific management. 
The management also is held responsible for the proper selection 
and training of workers. Scientific management makes a fairly 
accurate determination of a fair day’s work practicable. It means 
greatly increased output without increased effort. Scientific man¬ 
agement aims to do away with lost motion and useless movements. 
It strives for maximum results with minimum effort; it does not 
signify frenzied production or over-driving. 

F. W. Taylor did not seem to have any definite concept of a 
1 Copley, F. B., ibid., p. xiv. 


194 


LABOR PROBLEMS 


fair basic wage. He apparently started with the idea of a customary 
wage. Under scientific management, output would be increased 
and wages raised. A form of piece wage was substituted for the 
day wage. Differences in wages between various workers would 
presumably depend largely upon the efficiency and output of the 
individual. Taylor opposed collective bargaining because it tended 
to level wages within a group. This tendency ran counter to his 
theory of payment according to individual output. His philosophy 
was one of self-reliance for the worker in so far as influence by other 
workers or groups of workers was concerned; but it exalted the 
expert far above the individual initiative of the worker. Unions 
were held to be unnecessary. It was assumed apparently that 
wages would always be paid in proportion to output. Since scien¬ 
tific management increased output, the worker would fare well 
under its influence. Taylor did not write about improving working 
conditions — safety, sanitation, better lighting, etc. His eyes were 
focused upon the scientific methods of doing work. He pictured 
the worker as a machine or as a working animal rather than as a 
human being with a peculiar personality. Under his system the 
worker was not expected to do independent thinking. Taylor 
did insist that scientific management would increase wages and 
banish poverty. However, he did not present a plan for taking 
care of those thrown out of work by machinery and scientific 
management. It was naively asserted that the displaced would 
obtain other jobs. As early as the eighties, Taylor insisted that 
the employment and discharge of employees was a specific function 
of management. It has been suggested that one of his functional 
foremen — the disciplinarian — was the forerunner of the personnel 
manager. 

Broader phases of scientific management in an industry include 
the systematic routing of materials and semi-finished products from 
department to department, the coordination or dovetailing of the 
work of departments, the proper location of industry, and the 
careful selection of officials. One of the essential steps in placing 
an industry upon an efficiency basis is that of putting “ authority 
in the hands of those who know what to do and how to do it, 
irrespective of whether they are the owners of the tools of produc¬ 
tion or not.” Much inefficiency exists today in boards of directors 
of corporations. Scientific management might well be applied 


SCIENTIFIC MANAGEMENT 


T 95 


all along the line. It has been applied chiefly to the mechanical 
or production side of industry; but its methods and principles 
may be carried into marketing, and into planning for future busi¬ 
ness. Furthermore, the effectiveness of scientific management 
depends upon the physical and mental condition of workers — 
upon high and rational standards of living, upon good foremanship, 
upon security and absence of worry, upon opportunities for whole¬ 
some recreation, upon educational facilities, upon individual and 
group morale. Scientific management is much more than mechani¬ 
cal correctness or wage incentives. 

THE OPPOSITION OF ORGANIZED LABOR 

The fierce opposition of organized labor to scientific management 
has been due in no small measure to its use by managers who wished 
to over-drive workers and who substituted the will and desire of 
the management for “ the discipline of science.” Scientific manage¬ 
ment has in actual practice too frequently been unscientific, or 
has been applied in such a fashion as to make workers feel that 
they were machine-like. The chief reasons for the attitude of 
organized labor may conveniently be discussed under six heads. It 
must not be overlooked that an increasing number of examples 
may be found in which organized labor has joined with manage¬ 
ment in the introduction of scientific management methods. 
Notable instances of cooperation may be found in the clothing 
and textile industries, and in the railway shops of several important 
systems. 1 There is reason for asserting that scientific management 
and labor organizations are not “fundamentally and permanently 
antithetical.’^ 

i. The introduction of a machine or of a new and more efficient 
method of doing work, is often a cause of temporary or permanent 
unemployment for some workers. Even short-run difficulties loom 
ominously on the horizon of the worker and his family; such gloom 
cannot readily be dissipated by the optimism of the long-run 
philosopher. For many individuals there is no long-run. 2 In these 
days, technological unemployment cannot be laughed out of court; 
it haunts the family of almost any worker, skilled or unskilled, 
clerical or executive. 

1 See the chapter on cooperation between management and men. 

2 See discussion on the introduction of machinery, pp. 138-141. 


LABOR PROBLEMS 


196 

It is perhaps worth while to call attention to the obvious fact 
that the man who is “working for himself” does not object to 
methods or systems which lighten his work. The farmer is glad 
to obtain a tool which will increase his productivity. Even the 
conservative wife of the farmer is not adverse to the installation 
of a new or better pump, an electric sweeper, or some other ma¬ 
chine which will save steps. Why then, it may be asked, does the 
wage earner so frequently resist the introduction of new machinery 
or of new and scientific methods of performing work? The farmer 
and the farmer’s wife do not fear that the new machines or methods 
will cause them to lose their jobs, or that they will be called upon 
to do much more work for little more pay. They believe, on the 
contrary, that their income may be increased and the length of 
their working day reduced. In short, they are confident that the 
results of their efforts will be multiplied. On the other hand, the 
wage earner feels instinctively, too often as a consequence of past 
experience, that the system of scientific management is some more 
or less subtle scheme for advancing the interests of his employer 
at the expense of the workers individually or as a class. How can 
the point of view of the worker be modified until it coincides in 
this particular with that of the farmer or with that of the man who 
is “working for himself”? 

The wage earner is today insistently demanding that a portion 
of his share in the advantages accruing from the introduction of 
improved machinery and of scientific management be given to 
him in the form of a shorter working day or week. His conception 
of a desirable form of society in the twentieth century is not one 
in which a certain number of individuals work at high .speed during 
a long working day, but one in which all work during a short work¬ 
ing period. There are, obviously, at least two alternative methods 
which may be pursued in producing a given quota of goods and 
services: a small number of men may be employed for a long 
working day or a larger number for a shorter period. From the 
standpoint of the wage earner observing a large and apparently 
growing army of unemployed, the second alternative is by no 
means repulsive. His ideal is not necessarily maximum productiv¬ 
ity per worker per day, but a condition in which work and recrea¬ 
tion are blended for each and every individual. And, if economics 
is “ the reasoned activity of a people tending toward the satisfaction 


SCIENTIFIC MANAGEMENT 197 

of its needs,” shall the economist confidently assert that the wage 
earner’s ideal is one worthy only of contemptuous rejection? 

2. Workers often feel that scientific management as it has been 
carried out in actual practice is a new-fangled way of over-driving 
introduced by employers who are as a rule opposed to labor organ¬ 
izations. A score of years ago, the American Federation of Labor 
adopted a resolution which read in part: “We are opposed to any 
system of shop management which requires one man to stand over 
another, timing him with a stop watch in order to speed him up 
beyond his normal capacity.” From the point of view of the typical 
pioneer in scientific management as well as from that of many 
an industrial executive today, the model worker is the vigorous 
man who freely expends all of his surplus energy during working 
hours and who utilizes his non-working hours only for recuperation 
and preparation for another day’s work. It was not the purpose 
of the older type of scientific management experts to allow the 
worker to depart from the door of the factory at night with more 
than a minimum of surplus energy for recreation, for family life, 
for civic duties, or for union activities. In short, there has been 
too little in the program of many management experts which 
indicated that the wage earner should be given an opportunity 
for individual development. One also finds little, or more 
accurately nothing, in F. W. Taylor’s book, The Principles of 
Scientific Management , which indicates that he appreciated or 
sympathized with the point of view of the wage worker. Even the 
slave holder of ante-bellum days was interested in “welfare work.” 
But, of course, the slave owner was concerned in the matter purely 
and solely for the purpose of increasing the efficiency of the slaves 
or of reducing the cost of production. 

Taylor states that a long series of experiments has shown that 
an increase in wages up to 60 per cent beyond the wages usually 
paid has a good effect upon wage workers. But, “on the other 
hand, when they receive much more than a 60 per cent increase 
in wages, many of them will work irregularly and tend to become 
more or less shiftless, extravagant, and dissipated. Our experi¬ 
ments showed, in other words, that it does not do for most men to 
get rich too fast.” But what of the efficiency of the corporation 
which receives large increases in its rate of profits? How do such 
increases affect the alertness of the managers, the adoption of 


LABOR PROBLEMS 


198 

improved methods, machines, and safety appliances? Can the 
workers or the consumers afford to allow an employing corporation 
to increase its rate of profits? If so, how rapidly and how much? 
This is an unworked field of management engineering. And our 
engineers are not enthusiastically interested in investigations of 
this sort. 

The non-social lump-of-work argument is closely paralleled by 
what may well be called a lump-of-capital argument. Many a 
corporation composed of individuals who are not in business for 
their health has obtained a patent upon some new appliance which 
would cheapen the cost of production, but necessitate the scrapping 
of much valuable equipment; and, consequently, with the aid of 
our antiquated patent laws such corporations have quietly shelved 
the patent. The attitude of the capitalist in such a case is not very 
dissimilar to that of the workingman who opposes the introduction 
of machinery or processes which threaten his trade or his lump-of- 
labor. In addition to the prevention of soldiering on the part 
of workers one of the problems of a well-rounded program of scien¬ 
tific management would be that of preventing the shelving of new 
appliances and machines. 

All careful and disinterested students of scientific management 
will doubtless agree that, with certain notable exceptions, such 
systems are advocated by the employer, that the employer in¬ 
stituting them expects to direct their operation, and that the 
systems are primarily adopted for the benefit of the employing 
group. The problems connected with the various systems are 
viewed from the standpoint of the management and of the investor. 
Benefit to the wage earner is perhaps considered to be an incidental 
advantage; but normally it is a secondary matter. The bright and 
shining goal — the attractive lure — is lowered costs and increased 
profits rather than better workmen and citizens, or more leisure 
and culture and enjoyment for the toiling masses and their families. 
Is it reasonable to expect that the wage earners, organized or un¬ 
organized, will grow enthusiastic over a lopsided system of scien¬ 
tific management? If, as F. W. Taylor declared, “close, intimate, 
personal cooperation” is required to “energize” a plant, scientific 
management cannot reach a high degree of success while the work¬ 
ers distrust the motives of the employer, or so long as the workers 
in the plant are convinced that the management is trying to get 


SCIENTIFIC MANAGEMENT 


199 

more work out of them without proportionally increasing the wage 
payments. 

The average American citizen looks askance upon an arbitrary 
government which is in no way under the control of the governed. 
The despot, whether enlightened and benevolent or not, would 
be regarded with suspicion and would not be tolerated. Men have 
repeatedly and vigorously objected to arbitrary action on the part 
of government. And for centuries the western world has been 
slowly, but irregularly, moving toward democracy. The Louis XIV 
view of government has not disappeared from the business world. 
Will not, therefore, the typical wage earner granted political 
privileges but shut out of the councils of industry, distrust the 
management of the business in which he earns his daily bread? 
He will certainly see in the plans of the employer schemes for 
quietly and effectively squeezing the laboring man. The workers 
in our shops, factories, and mines can no more be expected to look 
with favor upon arbitrary changes concerning which they have not 
been consulted, than can the average citizen of today be expected 
smilingly to abide by the rulings of an arbitrary monarch — except 
in emergencies. 

3. Workers dislike being treated as machines or as animals. 
It has been suggested that in badly managed factories of the 
old, unscientifically managed type, employees were treated like 
beasts; but in certain scientifically managed plants, with welfare 
appendages, they are treated like stock on a well-managed stock 
farm. Labor is insistently demanding that employees be treated 
as self-respecting men. Is it reasonable to expect that workers 
will willingly and contentedly leave the determination of the 
definition of systematic soldiering and of injurious speeding-up 
to the inevitably prejudiced judgment of their employers? The 
views of organized labor are well expressed in the following sentence: 
“To experiments which may be made in the name of science to 
discover the highest speed which a machine can attain, its greatest 
capacity for production, and the minimum length of time in which 
its usefulness can be exhausted before it is discarded and thrown 
on the scrapheap, labor has no objection,” but laboring men will 
object to similar experiments performed upon themselves. 1 

4. The workers feel that the introduction of scientific manage- 
1 Frey, J. P., Journal of Political Economy , May, 1913, pp. 410-411. 


200 


LABOR PROBLEMS 


ment in some subtle way degrades them by taking away their 
initiative and their knack of doing things. Scientific management 
carries machine discipline to its logical conclusion. It eliminates 
rule-of-thumb methods, guesswork, and personal initiative. The 
handicraft method, with its stress upon the skill of the individual 
worker, is discarded for the minute directions of the planning 
room. 5. A labor organization wishes stability in regard to 
methods, rules, and bargains. Scientific management is founded 
on the hope of never ceasing modifications and improvements. 
This antagonism will doubtless be somewhat reduced as unions 
are recognized and treated with in regard to working conditions, 
or as the union is enabled to drop its fighting proclivities and turn 
to the more civilized methods of the conference table. 

6. Scientific management stresses individual achievement and 
wages. Consequently, it tends to break down the solidarity nour¬ 
ished by labor organizations. Again, this menace to organized 
labor is especially grave so long as unions are primarily fighting 
aggregations. The strong aggressive union has frequently de¬ 
manded and obtained higher wages, not as the reward for greater 
or better output, but because of the great power wielded by the 
organization. Scientific management, although without any ade¬ 
quate method of arriving at a basic wage scale, grades wage pay¬ 
ments in proportion to individual effort and skill. Certain broad 
aspects of this antagonism are worthy of brief consideration. 

The day of the individual entrepreneur is of the past. We may 
regret his going; we may vociferously assert that he was superior 
to the giant corporation with its collection of mutually independent 
units, and we may argue that the rivalry between managements is 
essential to business progress and industrial efficiency; but the 
corporation and the gigantic merger are here and here to stay. 
Likewise, the day of individual bargaining with the isolated worker 
is passing. Employers may strive to delay its going; but the 
effort will not be successful. Professor Commons has pointed out 
that unorganized as well as organized workers are willing to 
strike for the right to bargain collectively. “It is their desperate 
recognition that the day of individual bargains is gone for them.” 
It is safe to assert that scientific management will not be success¬ 
fully introduced and maintained by union-smashing corporations 
demanding individual bargaining with workers, because “close, 


SCIENTIFIC MANAGEMENT 


201 


intimate, personal cooperation between management and men” 
obviously is impossible under such conditions. 

Organized labor is definitely committed to the method of collec¬ 
tive bargaining. The employer who demands the continued use of 
the individual bargain, whether the demand is made in the name 
of liberty and the freedom of contract or in the name of efficiency, 
becomes an object of suspicion. Individual bargaining is pro¬ 
ductive of distrust rather than of harmonious cooperation. And 
consequently scientific management can only hope to succeed, in 
the long run, in energizing workers by utilizing the collective 
bargain. Accepting the collective bargain means the partial 
admission of the representatives of the workers into the councils 
of the employers. It is a tentative step away from autocracy in 
business; it is a step toward putting industry upon a peace instead 
of a war footing. Collective bargaining and the admission of the 
workers into the councils of the management are essentials of 
close cooperation between the management and the employees. 
The leaders in the movement for scientific management have 
not, as yet, given this fundamental requirement adequate recog¬ 
nition. 

In fixing upon the remuneration to be given the wage earner in 
a factory where scientific management is utilized, two items must 
be determined: the day wage and the amount or rate of the 
premium or bonus. In either case it is possible to use the collective 
bargain. The premium rate as well as the day wage can un¬ 
doubtedly be fixed by means of the trade agreement. Scientific 
management can therefore use the collective bargain; it is not 
restricted to the individual bargain. And it is not clear that the 
wage earner will find bargaining collectively as to the premium to 
be paid is necessarily inimical to the interests of labor. Although 
under a premium or bonus plan all workers in a given class would 
not receive the same weekly wages, yet the premium rate could be 
adjusted by agreement between the management and the union 
officials. The rate also could be so adjusted by agreement as to 
militate against over-driving. The spokesmen of organized labor 
inform the public that the union demands a minimum wage, not 
a uniform wage. But a reasonable premium plan would offer a 
minimum wage with an opportunity to receive a bonus for efficiency. 
This would not necessarily be inimical to organized labor unless a 


202 


LABOR PROBLEMS 


flat rate of wages within a given class of workers is essential to the 
maintenance of union solidarity. 

In order that collective bargaining be successful, it is desirable 
that a determination be made of what is a fair day’s work. Al¬ 
though scientific management offers only an empirical solution of 
the problem of a fair wage, it goes further in the important matter 
of a fair day’s work. Before the days of scientific management 
there was little or no exact knowledge as to the amount of work 
which a craftsman or laborer ought to do in a day. Like the matter 
of a fair wage, a fair day’s work was determined in a rough and 
ready manner, hence the employment of speeders and of prodding 
foremen. A period of depression has always been an excellent 
stimulant for the typical worker. Time cards, stop watches, mo¬ 
tion studies, cost systems, and functional foremen are now giving 
us accurate definitions of a fair day’s work. Wage earners and the 
management may not agree as to all deductions made from the 
data accumulated, but accurate information is desirable. We are 
rapidly approaching a time when, in our large industrial establish¬ 
ments at least, one cause of contention between employer and 
employee will disappear or at least be greatly minimized. A fair 
day’s work may now be ascertained within a reasonable degree of 
accuracy by scientific methods. 

One of the greatest weaknesses of scientific management has been 
the disregard of the worker’s point of view. It does not seem to 
have been understood by many of the exponents of the older type 
of scientific management that the worker has loves, hates, aspira¬ 
tions, and a desire for freedom. Smaller pay, declares the wage 
worker, with some approach to a voice in management is better 
than larger pay and industrial autocracy even though the latter 
be sugar-coated and called scientific management. Wage earners 
have been distrustful of welfare work; they prefer to be “free 
rather than clean.” A similar situation obtains in regard to scien¬ 
tific management, as the utterances of labor leaders give abundant 
evidence. The wage earner may be mistaken, and he may be short¬ 
sighted and superlatively selfish; but he is in earnest and his point 
of view must be reckoned with. On the other hand, is it not con¬ 
ceivable that the efficiency expert may have neglected some factors 
in the complex problem he is studying? Labor organizations exist 
not only for the purpose of obtaining certain specific benefits for 


SCIENTIFIC MANAGEMENT 


203 


wage workers, such as higher wages and a shorter work period, 
but they are also expressions of a working-class movement toward 
democracy and equality of opportunity. Is not this fact too often 
overlooked by the ardent advocates of scientific management? 

The newer type of management engineers, possessing a broader 
vision than the pioneer advocate of scientific management, points 
out that the goal of progress in the industrial sphere is two-fold: 
(1) Increased production at diminishing expense, and (2) increasing 
satisfaction on the part of workers in their work. Work, as well 
as leisure, should offer opportunities for self-expression and enjoy¬ 
ment on the part of the rank and file of workers. The men and 
women of the United States sorely need training for the sort of 
efficiency which is not merely predatory, for the fine and rare 
variety which makes for industrial harmony and social well-being. 
Careful consideration should be devoted to desirable modifications 
in the old and accepted forms of control in industry. The immedi¬ 
ately succeeding chapters deal with newer phases of scientific 
management which may be included in human engineering or 
organization engineering. 


RATIONALIZATION 

Scientific management is a plan for applying scientific procedure 
to a given enterprise. While the term “rationalization” has not 
as yet achieved a standardized meaning, it may, in general, be 
said to represent an attempt to apply scientific planning to a nation 
as a whole, or, finally, to the world. Rationalization “implies the 
belief that a more rational control of world economic life through 
the application of scientific methods is possible and desirable.” 
It would signify the knitting together of business firms or groups 
of businesses for the purpose of eliminating maladjustments and 
wastes in industries considered from a national or world point of 
view. The demand in this and other countries for economic plan¬ 
ning 1 is a demand for rationalization. World problems as to the 
distribution of such important world resources as oil, coal, rubber, 
coffee, nitrates, and iron ore should be examined from the point 
of view of rationalization. 


1 See Chapter 1. 


204 


LABOR PROBLEMS 


REFERENCES 

Bulletins of the Taylor Society 

Copley, F. B., Frederick W. Taylor 

Hobson, J. A., Rationalization and Unemployment 

Person, H. S., Editor, Scientific Management in American Industry 

Wissler, W., Business Administration, Sec. 4 


CHAPTER XII 


INDUSTRIAL PEACE 

DIVERGENT POINTS OF VIEW 

The significance, the benefits, and the evil features of organized 
labor cannot be adequately apprehended unless it is clearly seen 
that the cleavage in industry which has led to the emergence of 
a managerial, employing, or capitalist class and of an employed 
or wage-earning class, and to the development of modern labor 
organizations, has likewise produced points of view which are 
diametrically opposed to each other, and which cannot be logically 
reconciled unless the working and social environments of the men 
holding these contradictory views are taken into consideration. 
Employees speak bitterly of practices which employers maintain 
are essential to the efficient operation of their establishments and 
to the maintenance of their rights as property owners. The man¬ 
agement denounces practices which the workers assert are neces¬ 
sary to prevent the degradation of the wage-earning class. At 
least two reasons may be given for this situation. The first is the 
more evident and better known. The employer is primarily inter¬ 
ested in increasing profits and dividends, in making the business 
pay. He is interested in lowering the labor cost per unit of his 
product. The employer is willing to raise the wage rate if raising 
wages will reduce unit costs. Employers and investors are in¬ 
terested in business profits and business costs measured in money. 
The employing group is primarily concerned with employees as 
productive and profit-making units. The employee, on the other 
hand, is dependent for a livelihood and for comforts upon his 
wages. He knows in a more or less definite manner that large 
profits are frequently obtained by enterprisers; he learns of watered 
stock and financial melons; he feels the insistent prod of the 
foreman, or experiences a cut in piece rates; he sees men over¬ 
driven fall prematurely from the ranks; and he feels that his 
employer is only interested in getting as much out of him as possible 

205 


206 


LABOR PROBLEMS 


for as small a wage as possible. The worker is especially concerned 
with the stresses and strains in industry which cause fatigue or 
injury, with the costs which are psychological and physiological, 
or human, rather than financial. Workers, organized or unor¬ 
ganized, are striving to better their working and living conditions, 
to get more of leisure and enjoyment, to gain improved opportu¬ 
nities for themselves and their children. 

When we are selling our own services to an employer, we are 
inclined to emphasize their importance and to feel that a high 
wage ought to be paid; but when we are in the ranks of the em¬ 
ployer we tend to depreciate the wage which should be paid for 
the services of employees. The direct economic motives of em¬ 
ployers who are looking toward profits and of employees who are 
receiving wages, are sufficiently divergent to color and bias atti¬ 
tudes upon matters relating to the management of industry. It 
may, however, be remarked that the sales departments of business 
enterprises are becoming vitally interested in the workers as con¬ 
sumers, as utilizers of leisure time. The sales department wishes 
them to be extravagant, to demand with the dollars in the pay 
envelope, a multitude of commodities — and the more dollars in 
the pay envelope, the greater the possibilities and probabilities of 
expenditure. 

The second and more subtle cause of divergent points of view is 
the result of very different working environments and daily ex¬ 
periences. The worker is constantly in touch with concrete ma¬ 
terial and physical forces; he has little contact with the immaterial 
elements in society such as legal postulates, property rights, 
fluctuation in market values, or the importance of managerial 
ability. “ Everything to the worker, even to his own activity, 
is the outcome of physical force, undirected and unchecked by the 
spiritual element.” The job is highly important to all of us. It 
determines our income, our social standing, our home conditions, 
and our associations. It puts its stamp upon all of us. Workers 
are beginning to feel a property right in their jobs; they are be¬ 
ginning to demand continuity and seniority rights. The employer 
or the management moves in an entirely different realm. He is 
not directly and personally concerned with the physical processes 
of the factory or of the mine. The employer lives in an environ¬ 
ment which accepts as axiomatic the supremacy of property rights, 


INDUSTRIAL PEACE 


207 


the desirability of legal regulations, and the supreme importance 
of mental ability and of the “value sense.” The management 
demands efficiency and is inclined to stress the desirability at times 
of making changes in the personnel. Workers usually complain 
of a scarcity of jobs; they are inclined to be pessimistic about 
opportunities. The American business man looks confidently for¬ 
ward to business prosperity; he expects to amass a fortune. He 
is optimistic about opportunities for advancement. Since an in¬ 
dividual comprehends only that which he has experienced, or which 
is at least analogous to it, the environment and the experience of 
the two classes lead inevitably to the development of individuals 
possessed of divergent prejudices, habits, ideals, and modes of 
thinking. Because of widely different life experiences, intelligent 
and sincere men will insistently adhere to widely different, but to 
each self-evident, propositions respecting the same subject. 

As an example, consider the interpretation of the famous phrase, 
“labor is entitled to all that it produces.” The Socialist and the 
conservative employer may agree that labor is entitled to what it 
produces; but they will disagree upon the interpretation of the 
word “produce.” To the wage earner, production is mainly a 
process involving manual labor and physical force. To the employ¬ 
ing capitalist the most important factors are managerial ability 
and business foresight. This phase of middle-class thought fre¬ 
quently appears in our language. A man who merely furnishes 
the necessary funds for the construction of a dwelling house is 
often said to be “ building a house.” The worker whose sole business 
experience is restricted to the act of receiving his pay envelope 
every two or four weeks and turning its contents over to the 
butcher, the grocer, the landlord, and others, cannot be expected 
to possess as high regard for the inviolability of a contract as the 
business man whose success depends upon the general recognition 
of the sacredness of contract and property rights. And it is not 
logical to assert that one is more highly intelligent or moral merely 
because of these divergent viewpoints, which are the results of 
“natural and general causation.” These points are not merely 
more or less interesting and spectacular matters; they are pregnant 
with considerations which ought not to be overlooked by any 
student of labor relations. Let the reformer, statesman, philan¬ 
thropist, capitalist, and labor leader take notice that “if you wish 


208 


LABOR PROBLEMS 


to change the laborer’s [or the employer’s] viewpoint materially, 
you cannot do it by warfare or denunciation. You must begin 
back of the man upon the determining influences which play upon 
him.” 1 

The struggle between labor and capital is frequently stressed; 
but it should be recalled that group struggles and within-the-group 
conflicts are older than history. The antagonism between employer 
and employee is often not as fierce as between competing business 
men. Competing grocers, manufacturers, and lawyers are not 
always friendly. Bitter feuds occur occasionally within parties, 
fraternal organizations, families, nations, and labor groups. The 
chain stores are opposed by the independents, cement producers 
by brick manufacturers, cigarette makers by the candy makers. 
The debtor West distrusts the creditor East, and the wheat farmers 
fear the railways. Conflict and rivalry in human affairs are not 
recent or unusual phenomena. 

COMMON INTERESTS 

While examining the conflicting points of view, the fact that 
labor, organized and unorganized, capital, and management have 
certain common interests, should not be overlooked. The antagon¬ 
ism between these factors in production has been accentuated by 
bad management, by failure to recognize the fundamentals in 
productive activities, and because of the neglect of the human side 
of industry. Without labor capital is useless, and without capital 
labor is hopelessly handicapped. Good management is an essential 
in successful industrial undertakings. Industrial progress in the 
future can be anticipated when workers become interested in their 
work, have some part in managing the business of which they are 
essential factors, and are supplied with sufficient capital under 
competent management. Whether labor and capital are considered 
as partners or in the relation of seller to buyer, one cannot prosper 
without the other. If common interests did not exist, there would 
be no hope of permanent industrial peace. 

Workers, management, and investors in a business are interested 
in its continuance and its regular operation. A plant that is “in 
the red” or an industry which is slipping backward does not offer 

1 Hoxie, R. F., Journal of Political Economy , Vol. 15, p. 350. See also 
Veblen, T., The Theory of Business Enterprise. 


INDUSTRIAL PEACE 


209 


an attractive opportunity to workers. The failure of a business 
concern injures the three groups. They are mutually interested 
in a wide and sure market for the output of the plant. Legislation 
adversely affecting an industry will be opposed by the workers as 
well as by the investors in that business. Brewery workers and 
brewers were not favorable to prohibition. There are certain 
mutual interests in regard to health and safety in a plant. Good 
working conditions make for efficiency. May it not also be possible 
for labor, capital, and management to find common ground in 
opposing special privilege which locks out of use land, natural 
resources, and patents? 

The existing industrial order must prove its right to continued 
life by efficiency in the production of the necessities and comforts 
of life for the great drab mass of working human beings instead of 
the mere piling up of profits. If it is to avoid the danger of Com¬ 
munism and of the violent laying on of hands, business must be 
carried on in the future with the slogan of social service or of mutual 
benefit placed in the foreground; and, unless it is to face determined 
opposition, organized labor must be ready to come halfway. 

A NEW POINT OF VIEW 

According to the laissez faire philosophy, wages, hours, and all 
other particulars of the labor contract were fixed as the result of a 
bargain between the employer and employee. Competition auto¬ 
matically determined in a large measure the terms of the bargain. 
The general public, including the consumers of the products made 
by the wage earners, was little concerned as to the settlement of 
any differences which might arise between employer and his em¬ 
ployee. Certain rules of the competitive game were promulgated 
by governmental authority. Violence and the destruction of prop¬ 
erty were unlawful, contracts must be fulfilled, and any inter¬ 
ference with the freedom of competition was illegal under the 
common law. Beyond these regulations the laissez faire philosophy 
was unwilling to allow the government to go. So long as industries 
were small, labor unorganized or organized only into local groups, 
and competition was a live and efficient force, the “third party” 
or the general public could accept without great reluctance the 
principles of the let-alone philosophy. If a single individual did 


210 


LABOR PROBLEMS 


not desire to accept the conditions imposed by his employer, he 
stopped work and his place was either filled immediately by another 
or left temporarily vacant. The dissatisfied man sought another 
position in a competing establishment. If a dozen workmen in 
one establishment quarreled with their employer as to wages, and 
if a strike or lockout occurred, only a minute reduction of the total 
supply of that particular product would follow. The market and 
prices would not be noticeably affected. A labor difficulty was 
only of local import, and only disturbed a few people. Bargains 
between individual employers and their employees did not assume 
such proportions as to call for outside aid or interference of any 
sort, and the issue was not of sufficient importance to attract the 
attention of the general public or of the governmental authorities. 
Such was the condition which prevailed in the industrial world 
before the advent of organized labor and of large-scale industry; 
and such are the conditions which still prevail where labor is not 
well organized and industry is still small-scale, as in the small retail 
store. 

But time passes and industries bulk larger and larger. The 
railway,the telegraph, and the telephone come to be business ne¬ 
cessities. Powerful unions arise among the employees, and col¬ 
lective bargaining gradually replaces the individual bargain between 
the employer and the employee. A labor dispute between the 
management and the employees of a railway system, a coal min¬ 
ing company, or a large steel industry now becomes a matter 
of national import. A switchmen’s strike ties up a railway; 
many towns and thousands of individuals are threatened with a 
scarcity of food and fuel in the middle of a severe winter. Business 
establishments are forced to suspend operations, and famine and 
the winter’s cold threaten hundreds who do not know the switch¬ 
men or the railway officials. The outside world is no longer willing 
to wait complacently while the contestants fight it out according 
to the old individualistic rules of the game. The struggle throws 
the mechanism of the business world out of gear; it affects the 
comfort and the happiness of hundreds of distant homes. Suddenly 
public sentiment crystallizes, and the public demands in no un¬ 
certain tones that there shall be no stoppage of the arteries of 
trade. Transportation facilities, fuel, food, and other supplies 
are needed. The difficulty must be adjusted and industrial warfare 


INDUSTRIAL PEACE 


211 


must end, or society through its instrument, the government, will 
interfere in order to compel the continuous operation of a so-called 
private business. The increasing intricacy of the modern industrial 
system has made the stoppage of business activities a far-reaching 
and serious matter. New theories of governmental powers are the 
inevitable consequences of fundamental economic transformations. 

Improved means of communication, division of labor, and the 
centralization of industry have made men interdependent; each 
has become dependent upon the work of others living in different 
parts of the country — of the world, in fact. As our social and 
industrial organism has become more and more complex, it has 
at the same time grown more and more sensitive to the improper 
functioning of any part of the organism. A strike or a lockout in 
an important industry means a large area of disturbance and of 
unsettled conditions. The public becomes the interested third 
party. Individuals and groups of individuals can no longer be 
allowed without interference to carry on an industrial war. Such 
a war is as destructive of economic welfare as a feud is of civic 
welfare. The civilized substitute for the feud is the law court. 
The modern alternative for industrial warfare in the great industries 
which feed the arteries of the business world is some form of indus¬ 
trial tribunal using arbitration, mediation, or the trade agreement. 
The evolution of a system of industrial tribunals involves or implies 
the right of the public through its legally constituted authorities 
to investigate in the case of labor disputes; it further implies the 
right to publicity in the affairs of large-scale businesses. Here is 
a very distinct encroachment upon the old well-defined sphere 
of private business. In fact, private is now translated by many 
thoughtful and conservative people to be synonymous with semi¬ 
public. 

In spite of the nominal adherence given to the theory of “rugged 
individualism,” interference with business by society is not a 
new and unusual phenomenon. Law and order modify the condi¬ 
tions of crude “jungle ” competition. The enforcement of contracts, 
the passage of protective tariffs, and the granting of subsidies are 
familiar acts on the part of governments. Bankers have frequently 
been given governmental assistance in a time of panic. Public 
carriers, inn-keepers, and cabmen have long been subject to public 
regulation. Factory legislation dates back to the first years of 


212 


LABOR PROBLEMS 


last century. Provisions for compulsory arbitration or for com¬ 
pulsory investigation and publicity in the case of a serious labor 
dispute only carry the principle of governmental interference a 
short step further. Yet, many people fear the effect of compulsory 
arbitration who are in favor of protective tariffs and ship subsidies. 

After large-scale and integrated industry has destroyed the 
potency of competition as a regulator of wages and prices, the 
public is placed in a position of dependency if private business is 
uncontrolled, and all large industries become ripe for public regu¬ 
lation or public ownership. The railways are now generally recog¬ 
nized to be quasi-public industries; and all large businesses 
producing the necessities and comforts of life are rapidly passing 
into the same category. At present, two kinds of industry are 
quite generally recognized as ripe for active intervention on the 
part of society: ( a ) industries connected with the public utilities 
such as railways and coal mines, and ( b ) the sweated industries. 
In the latter case the government interferes in order to protect 
the consumers, to protect the weaker members of the wage-earning 
classes, and to prevent racial deterioration. It regulates the public 
utilities in order to prevent serious disturbances in the business 
world and to avert suffering and hardship on the part of the con¬ 
sumers and the producers of various necessities of life. 


DEFINITIONS 

As the terms mediation, arbitration, and trade agreements are 
given slightly different significations by different writers, it seems 
necessary to define the terms before proceeding to a consideration 
of the practical applications of these substitutes for industrial 
warfare. When a third party in the form of a private or a public 
board brings employers and employees together with a view to 
settling some dispute between the two parties, the process is called 
mediation. Arbitration implies an authoritative board or court 
which is empowered to make an investigation and to settle the 
dispute. The suggestions or findings of a board of mediation may 
or may not be accepted; the mandates of a board of arbitration are 
binding upon both parties. Arbitration may be voluntary or 
compulsory, and primary or secondary. Arbitration is voluntary 
when both employers and employees agree beforehand to accept 


INDUSTRIAL PEACE 


213 


the awards of the board. Arbitration is compulsory when the 
government compels the interested parties to submit the case to 
the board and to abide by its findings. Arbitration may, however, 
be compulsory only in regard to the submission of the case; the 
enforcement of the award is then left to the force of public opinion. 
According to Mr. Gilman, the term “compulsory arbitration” is 
a misnomer. “Legal regulation” is the term which he uses. Pri¬ 
mary arbitration signifies fixing the terms of the labor contract 
by an authoritative and impartial board. Wages, hours, and 
various incidental matters are to be determined by the board. 
It is the process of making the laws which determine the relations 
of capital to labor in a given industry. Secondary arbitration is 
purely judicial. The board interprets the existing rules and regu¬ 
lations in regard to the payment of wages and the like. 

Trade agreements are compacts in regard to wages and other 
conditions of employment made by joint conferences attended by 
representatives of both employers and employees. The joint con¬ 
ference system is a methodical type of collective bargaining. Under 
this system disagreements are settled “within the family”; the 
general public is not represented. In the system of mediation, the 
“third party” merely intervenes and offers its services in bringing 
the parties together; but in the case of a board or court of arbitra¬ 
tion the representatives of the public have authority to adjust 
differences. Under the system of arbitration the right of the 
public to intervene in so-called private business is clearly recog¬ 
nized. The agreement reached through mediation or the award 
demanded by arbitrators becomes the trade agreement for that 
industry during a definite period of time. 


MEDIATION AND ARBITRATION IN THE UNITED STATES 

After a series of strikes in the eighties, federal legislation was 
passed in 1888, applying to disputes between transportation com¬ 
panies engaged in interstate commerce and the employees of such 
companies. Provision was made for the organization of a tempo¬ 
rary board of arbitration at the request of one of the parties to the 
dispute, providing the other party agreed. The award was not 
binding upon the parties concerned. This portion of the act of 
1888 was never used. The President was authorized to appoint 


214 


LABOR PROBLEMS 


commissioners for the purpose of investigating any labor dispute 
involving corporations engaged in interstate commerce. The 
decisions and recommendations were to be made public. Such an 
investigating commission was appointed soon after the end of the 
Pullman strike of 1894. 

The pioneer act of 1888 was superseded by another in 1898 
which provided for arbitration and mediation but not for investiga¬ 
tion and publicity. A permanent board of mediation was estab¬ 
lished to intervene in any dispute involving railways engaged in 
interstate commerce. This board could only offer its services as a 
mediator upon the request of one of the parties to the dispute. 
If mediation failed, the board was required to propose arbitration. 
If arbitration was accepted voluntarily, both parties were required, 
under penalty, to refrain from strikes or lockouts while the court 
of arbitration had the dispute under investigation and to abide 
by the decision rendered for a limited period. After 1906, some 
use was made of this act known as the Erdman Act. It was changed 
slightly in 1913, and continued in force until the railways were 
placed under federal control on December 26, 1917. 

Under the provisions of the act providing for the return of the 
railways to private operation on March 1, 1920, two types of 
boards were required to handle industrial disputes — railway labor 
adjustment boards and a “Railroad Labor Board.” Labor adjust¬ 
ment boards “may be established by agreement” between the 
railways and their employees. The important feature of the rail¬ 
way provisions of the act was the creation of the Railroad Labor 
Board. This Board was given considerable authority; but its 
decisions were not mandatory. It was empowered to make in¬ 
vestigations as to the relations of carriers to their employees and 
to publish the results. It had the power to subpoena witnesses 
and was given access to books and records relating to matters under 
consideration. The Board was required to make a decision and 
was authorized to determine whether or not its decisions were 
carried out and to make public the details of the determination. 
Public opinion was apparently the ultimate court of appeal. How¬ 
ever, it may be suggested that in an emergency, the injunction 
might be used by the courts to obtain obedience to the rulings of 
the Board and to prevent a railway tie-up. The Board was on 
various occasions defied by the railways and by the unions. Finally 


INDUSTRIAL PEACE 


215 


in 1926 another law was passed which had the support of the rail¬ 
way executives and the unions. This act provides for local adjust¬ 
ment boards to settle local disputes, for mediation by a federal 
Board of Mediation and, mediation failing, for voluntary arbitra¬ 
tion by a special board. The award of a board of arbitration is 
mandatory. If one side refuses to accept arbitration, the Board of 
Mediation may recommend to the President the appointment of an 
emergency board to investigate and report within thirty days. 
Until this board reports, both parties are forbidden to change “the 
conditions out of which the dispute arose.” To date, 1932, this 
law appears to be reasonably satisfactory. 

Several important federal commissions on industrial relations 
have functioned in various emergencies. The anthracite coal strike 
in 1902 and the bituminous strike of 1919 were each settled by 
reference to a federal commission organized as a court of arbitration. 
A Federal Commission on Industrial Relations reported in 1915. 
Its members united in recognizing the important functions in the 
maintenance of industrial peace which should be performed by 
trade agreement systems, and by governmental machinery for 
mediation and voluntary arbitration. President Wilson’s Media¬ 
tion Commission of 1917 recommended “some form of collective 
relationship between men and management.” During the World 
War, the National War Labor Board played an important role in 
preventing and settling industrial disputes. 

It is worthy of notice that during the depression (1932) the rail¬ 
ways did not arbitrarily declare a wage reduction. After much 
negotiation, the strongly organized railway workers accepted a 
reduction, but insisted that an attempt be made to stabilize and 
increase employment in the industry. The problem was clearly 
seen as being one in which the interests of the workers as well as 
of the investors should be considered. 1 

The Act of 1913, creating a Department of Labor, provided that 
the Secretary of Labor shall have power to act as a mediator and 
appoint commissioners of mediation in labor disputes whenever 
conditions warrant such action. The Conciliation Service has been 
organized within the Department. This Service does not inter¬ 
vene in disputes which come under the scope of the boards provided 

1 Leiserson, W. M., “Estimating the Labor Outlook,’’ Job Production Series , 
No. 5 (1932), American Management Association. 


2 16 


LABOR PROBLEMS 


under the Railway Act of 1926. The mediation work of the 
Service has been fairly successful. 

A majority of the states have laws upon their statute books 
providing for mediation or arbitration in case of labor disputes. 
The first state law was passed by Maryland in 1878; New Jersey 
followed in 1880. A Report of the Bureau of Labor groups these 
laws into four classes: (1) Local arbitration is provided, and the 
boards are temporary in character. (2) Permanent local boards 
may be established by private parties. (3) The State Commission¬ 
ers of Labor are authorized to arbitrate or to mediate. (4) Special 
state boards or commissions are authorized. 

The first-named system is the earliest one tried in the United 
States. The laws proved to be of no practical value. In several 
states this scheme has been incorporated in the law as a supplement 
to a state board; but in those states the provision has also proved 
to be of little practical importance. The second system has also 
been found ineffectual. In only one of the four states placing laws 
of this character upon their statute books did any tangible results 
follow. In Pennsylvania a few instances of successful work on the 
part of private boards are recorded. The success of the third system 
in five states has not been such as to justify an extension to other 
states. 

A score or more of states have adopted the fourth system pro¬ 
viding for permanent state boards for the purpose of intervention 
in case of labor disputes. Massachusetts and New York are the 
pioneers, and nearly all the remaining states using this system have 
copied largely from the laws of these two. The state boards are 
usually designated boards of conciliation and arbitration. The 
members are almost invariably appointed by the governor, and in 
most states are confirmed by the state senate. The members are 
usually three in number, although one officer only is provided in 
some states. In only a few states have the activities of the boards 
been considerable. The most successful state boards are those of 
Massachusetts and New York. Three kinds of action can usually 
be taken by state boards — mediation, arbitration, and investiga¬ 
tion. Except under the 1920 law in Kansas, the arbitration pro¬ 
vided for is voluntary, not compulsory. In only a few states is the 
practice of referring industrial disputes to a state board of mediation 
or arbitration well established. 


INDUSTRIAL PEACE 


217 


In January, 1920, the legislature of Kansas passed an act pro¬ 
viding for compulsory arbitration in industries “affected with a 
public interest.” This legislation was a direct consequence of con¬ 
ditions growing out of the soft coal strike of 1919. The industries 
“affected with a public interest” were public utilities, the manu¬ 
facture of food products and clothing in common use, coal mining, 
and the transportation of the products of such industries. The act 
established a Court of Industrial Relations which was given the 
power in the industries covered by the act to decide industrial 
disputes, to punish strikers, and, if necessary, to take control of 
industries in which the rulings of the court were not obeyed. An 
individual or even a group of individuals might quit their employ¬ 
ment at any time; but concerted action in the form of an organized 
strike or boycott or for the purpose of hindering the operation of an 
industry “affected with public interest” was unlawful. This law 
was an experiment tried in a state in which the industrial situation 
was not complex. It was bitterly attacked by the representatives 
of organized labor, and was defended by its enthusiastic friends as 
a newly discovered panacea. The limitations of the scope of this 
act providing for compulsory arbitration throw into bold relief the 
evident necessity for the continuous functioning of essential or key 
industries. The philosophy underlying the law appears to be that 
in such industries the right of the consuming public to demand an 
uninterrupted flow of output is paramount to the right of workers 
to use the ordinary weapons of organized labor in order to secure 
increases in wages or improved working conditions. The friends of 
the Kansas act insisted that the public is much interested in a strike 
“affecting the production and distribution of the necessaries of 
life.” It was evident that a struggle between men and management 
in an industry affected with public interest could no longer be 
looked upon as “a private war between labor and capital.” In 
1923, and again in 1925, the United States Supreme Court held 
the law to be unconstitutional in a case involving a meat-packing 
concern. 1 It was held to be an infringement of the right of contract. 
The Court declared that the Kansas Industrial Court had no 
power to fix a minimum wage in the meat-packing industry. 
“There is no monopoly in the preparation of food.” It is not clear 
whether the portion of the act relating to public utilities and to coal 
1 262 U. S. 522; 267 U. S. 552. 


2 l8 


LABOR PROBLEMS 


mining is or is not constitutional. No attempt has been made in 
recent years to enforce the act. In 1925, the state legislature 
abolished the industrial court and transferred its power to a public 
service commission. 


ADVANTAGES AND DEFECTS OF ARBITRATION 

The resort to trade agreements or to arbitration and mediation 
brings employers and employees into closer touch with each other. 
Much trouble and friction in industrial circles are caused by the 
lack of sympathy between the workers and their employers. After 
representatives of both parties are induced to gather around a 
table for a face-to-face presentation of opinion in regard to the con¬ 
troverted matters, a long step has been taken toward industrial 
peace. When both sides are presented, prejudice and preconceived 
notions often undergo modification. A glimpse of the other man’s 
viewpoint is often illuminating, educative, and fruitful of con¬ 
cessions. The peaceful method of determining the conditions of 
employment gives stability to business enterprises because certain 
elements of uncertainty are removed. 

Compulsory arbitration means that the strike and the boycott 
must be given up. The loss of these weapons tends to reduce the 
virility of the unions. Under a system of compulsory arbitration, 
organized labor might be forced into the political arena. Under 
the joint conference system, the sympathetic strike must also be 
given up. The radicals in the ranks of organized labor object to 
this system and to making contracts with their employers because 
by so doing they forfeit the right to strike at what seems to be a 
propitious moment. The joint conference system neglects the 
interests of the general public. In it lies the possibility of a com¬ 
bined monopoly of labor and capital. Joint agreements may mean 
higher wages linked with higher prices. Both sides in a labor con¬ 
troversy often fear the outside party who is unacquainted with the 
particular business. A preference is frequently expressed for a 
form of agreement “within the family.” If the state interferes with 
labor by providing for some form of conciliation or mediation and 
arbitration, it is logical for labor to demand that the status of the 
industry be made clear to the employees, that proper accounting 
methods be required of the corporation, and, finally, that the 


INDUSTRIAL PEACE 


219 


authority of government be used to force the adoption of efficient 
business methods in order that funds may be accumulated out of 
which fair wages may be paid. 

The advantages of the policy of settling industrial disputes by 
means of arbitration are easily presented. Arbitration, success¬ 
fully employed, means peace in industry instead of war. It pre¬ 
vents strikes, lockouts, and boycotts; and business activities may 
go forward without danger of periodic interruption. The great 
losses from such interruptions are not incurred; and the friction 
between employers and employees incident to strikes, boycotts, or 
even the more orderly processes of collective bargaining, is elimi¬ 
nated. A judicial or quasi-judicial determination of controverted 
points is substituted for the cruder and more direct appeal to the 
strength of organized labor on the one hand and of organized 
capital on the other. It may, with a reasonable degree of fitness, 
be compared with the substitution of court procedure for the feud 
and the duel. 

The defects of the policy of arbitration are more difficult of pres¬ 
entation. More subtle considerations are involved and the clash¬ 
ing of divergent interests and points of view comes much more 
clearly into the foreground. (1) The most serious defect in a system 
of compulsory arbitration grows out of the absence of any definite 
and generally accepted standard for the determination of a wage 
rate. No theory of wages, now formulated, has satisfactorily stood 
the test of criticism and of practical application in the industrial 
world; and no board of arbitration has been able to present a 
scientific standard by means of which disputes as to wage rates may 
be authoritatively and accurately settled. Consequently, boards of 
arbitration have as a rule compromised in fixing wage scales. When 
more than a mere compromise between opposing demands has been 
attempted, arbitrators have been influenced by a knowledge of 
what has been paid in the past in the industry under investigation, 
or what is now being paid in other shops and localities; or they 
have rested their decision upon the basis of the standard of living 
by them considered adequate for the wage workers concerned. The 
first alternative spells fixity, and will be further discussed under 
the head of the fourth defect. 

The second method cannot be considered scientific so long as no 
definite concept of the standard of living exists. In fixing railway 


220 


LABOR PROBLEMS 


rates the Interstate Commerce Commission has certain fairly 
definite items as points of departure, such as the actual investment, 
the depreciation, market rates of interest, the cost of operation. 
In the determination of a wage award, the standard of living is 
such an indefinite concept that difficulties arise which prevent any 
scientific award. Some of the problems are: What is the standard 
of living? Should it gradually rise as the years go by? Should an 
allowance be made for the physical deterioration of the worker? 
Should an allowance be made for insurance against old age, sick¬ 
ness, and accident? 

A dictum of the Ohio Industrial Commission throws an interest¬ 
ing sidelight upon the fundamental problems of a board of arbitra¬ 
tion. “Exact industrial justice would not take into consideration 
the demands of the employees or the proposals of employers, but 
would be determined after a full investigation and inquiry into the 
cost of production, cost of maintaining a satisfactory standard of 
living, distribution of profits, and all other such matters.” A brief 
study of this plan will disclose numerous practical difficulties. 
What is a “satisfactory standard of living”? To whom is it 
satisfactory? Does cost of production include a fair profit? And 
what is “fair profit”? From whose point of view is it fair? What 
would be the proper “distribution of profits”? And what of “all 
other such matters”? Since almost all industrial disputes directly 
or indirectly touch the question of wages, obviously, the first and 
foremost defect of arbitration offers almost unsurmountable ob¬ 
stacles in the present state of the science of economics. It will 
certainly be difficult to apply the much-discussed “rule of reason.” 

(2) The substitution of arbitration for the strike, boycott, or 
the trade agreement in the settlement of industrial disputes will 
tend to weaken organized labor or at least greatly to modify the 
form and programs of such organizations. The reason for this 
consequence is not difficult of discernment. Labor organizations 
have been formed to obtain by means of collective bargaining or 
militant activities, higher wages, a shorter working day, or some 
other improvement in working conditions. Unionists are loyal to 
the union and cheerfully pay dues only when they believe that the 
organization is a potent instrumentality to assist them in obtaining 
their demands. If arbitration becomes the accepted method of 
determining the wage rate, the necessity for the union becomes less 


INDUSTRIAL PEACE 


221 


clear to the average unionist. The resort to arbitration will not 
stimulate self-reliance and self-assertion among the workers. Of 
course, from certain points of view this seems an advantage rather 
than a defect. The editor of a well-known labor journal questions 
whether arbitration “has been of much practical value in giving 
the workers those opportunities for self-assertion” which are 
“necessary for their welfare if they are to take an active part in 
the determination of what their terms of employment and condi¬ 
tions of labor will be.” 

(3) Arbitration involves the intervention of a third party. The 
members of a board of arbitration who are supposed to be neutral 
and to represent the public, as a rule, are not familiar with the 
conditions in the industry. This fact adds to the difficulties in 
formulating a scientific judgment which will stand the test of 
rigorous criticism; and it does not inspire either side with confidence 
in boards of arbitration. Wage workers naturally hesitate to place 
the determination of matters which vitally touch their chief busi¬ 
ness in life in the hands of outsiders more or less ignorant of con¬ 
ditions in the industry and also of their point of view. 

(4) The procedure of a board of arbitration resembles that of a 
court; it is judicial in its methods, and, therefore, precedent plays 
a large part in its deliberations. Since labor is struggling upward 
toward a higher standard of living and toward higher social 
standards, labor organizations look with suspicion upon any in¬ 
stitution or method of procedure in which precedent plays a con¬ 
siderable role. Precedent for wage workers spells slavery, serfdom, 
or low standards of living and social inferiority. Laboring men and 
women are struggling to get out of the “servant” class. They 
want to be recognized as “equals” of their employers and the 
managers of the business in which they are earning a living. Wage 
workers are eagerly looking forward to the day when labor as well 
as capital will have a voice in determining the conditions in 
industry, to the time when the representatives of the employees 
will be admitted to the meetings of the boards of directors. Com¬ 
pulsory arbitration would seem to offer little opportunity to press 
forward along this line. 

Again, in case no definite legal principles are involved, the 
decisions of the board depend in no small measure upon the train¬ 
ing, interests, and idiosyncrasies of the judge or umpire. It has 


222 


LABOR PROBLEMS 


been noted that no fundamental principles which are of general 
acceptance can be laid down for the guidance of boards of arbitra¬ 
tion. Consequently, there is reason for the assertion made by labor 
leaders that the decisions of boards of arbitration depend upon the 
personal bias and the preconceived notions of the arbitrators. 
(5) The decisions of a board of arbitration, particularly when 
adverse to the workers, are difficult of enforcement. They might in¬ 
volve the necessity of penalizing large numbers of citizens. (6) At 
present, a law providing for compulsory arbitration is presumably 
unconstitutional. 

An incidental weakness or defect of arbitration is due to the lack 
of a consistent policy for or against it on the part of both employers 
and wage workers. Neither employers nor employees at all times 
and under all circumstances take the same attitude toward arbitra¬ 
tion. In some cases, unionists demand it; again, they reject such 
proposals. Likewise, employers sometimes favor arbitration; and 
again they contemptuously reject it. Employers usually stand for 
arbitration in industries when the unions are strong as in the railway 
industry. But in other industries where organized labor is weak or 
has been eliminated, the employers insist upon their right to run 
their business without interference. 

A FORMULA FOR INDUSTRIAL PEACE 

There is no simple and definite formula for industrial peace. 
There is no patent medicine which will remedy the industrial ills 
and animosities of today. There is no oil which will do away with 
industrial friction. In studying the problem of industrial peace, 
we should begin with a clear concept of the points of antagonism. 
Industrial peace is usually obtained through a compromise between 
somewhat divergent interests. Certain writers, speakers, and em¬ 
ployers tell us that the interests of the employee and his employer 
are identical, that there is no essential disharmony between labor 
and capital. Unfortunately, a brief consideration of the situation 
will disclose the error involved. 

It simplifies matters and aids clarity of thought first to analyze 
small and familiar business relations. A man is making under a 
patent a small article. He owns the building, the machines, and 
the raw material. He furnishes power and sells the output; and 
he hires for wages another man to operate the machines. Here are 


INDUSTRIAL PEACE 


223 


found the essentials of the employer-employee relationship as these 
essentials are also to be found in the mammoth plants of the 
United States Steel Corporation or the Ford Motor Company. 
Evidently, both of these men — employer and sole employee — 
are interested in producing an output that can be sold profitably, 
otherwise the business would cease to operate and both men would 
be obliged to seek other means of livelihood. To this extent their 
interests are harmonious. 

But the owner-employer is anxious to receive large profits. He 
desires to make the spread between costs and selling price a 
maximum, not necessarily on each article but on the sum total 
produced and sold. Wages per piece are included in expenses. 
The employer is anxious to reduce labor cost per piece — not 
necessarily per day, because higher wages per day often result in 
lower wage costs per piece. On the other hand, the worker de¬ 
sires to raise his wages, to get as large a share of the total income of 
the business as is possible without reducing the total. Here is 
the wage problem reduced to its lowest common denominator. In 
every industry employers and workers have common and divergent 
interests. 

Industrial peace is primarily a within-the-industry matter. 
Arbitration is only a makeshift to be used in badly managed im¬ 
portant or key industries — those affected with public interest —- 
in which peace is not attained from within. Any industry in which 
strikes periodically take place or in which sabotage or similar 
manifestations of inefficiency and illwill recur, is a mismanaged 
industry. If such an industry be one in which constant and 
efficient functioning is of only minor importance to the public, it 
may be sufficient in case of an industrial conflict to provide for the 
investigation of the business by a competent body of experts and 
to give to the public the diagnosis of industrial ills made by that 
body. If, however, the industry be a key industry, one clearly 
affected with public interest, the community concern in its con¬ 
tinuous and harmonious functioning is such that arbitration or 
some other outside-the-industry methods will soon be insistently 
demanded to prevent the periodic resort to strikes and lockouts. 
If peace in these industries is not maintained as a consequence 
of good management, the community will insist upon court- 
arbitration-procedure. 


224 


LABOR PROBLEMS 


CAN THE STRIKE BE ELIMINATED IN INDUSTRIES 
AFFECTED WITH PUBLIC INTEREST? 

Any consideration of the feasibility of imposing peace upon a 
recalcitrant key industry — one which for one reason or another 
does not maintain peace within the industry — leads immediately 
to two questions: (a) What are the “rights” of the general public 
or of the community as compared with those of the individual? 
Or, where do individual “rights’ 5 end and community “rights” 
begin? ( b ) Granting the sanction of law and public opinion, is it 
practicable to impose peace from without the industry by means 
of some form of industrial arbitration? Can a law providing for 
compulsory arbitration in key industries be enforced? If enforced, 
may sabotage or a concerted withdrawal of efficiency be antici¬ 
pated? 

To insist that a group of workers or the owners have no longer 
the right to tie up a key industry implies a very considerable 
modification of the generally accepted definition of individual and 
social rights. Our notions of justice and fair play, our labor 
policies, our conceptions of “rights,” and the background of our 
constitutional and legal system are fundamentally those of small- 
scale industry and of a predominantly rural people. These ideas 
and ideals were developed in a simpler economy which antedated 
the intricate social mechanism of today. In the epochs in which 
the traditional American concept of rights was gradually molded 
into its familiar form there were no key industries and little eco¬ 
nomic interdependence. Social inertia, a silent and persistent foe 
of change, has carried these pioneer ideals down into an urban and 
industrial epoch in which modifications are imperative. Our con¬ 
cept of rights needs restatement in terms which stress social well¬ 
being. 

Because of the absence of a generally accepted norm for the 
measurement of fairness and justice in the business world, arbitra¬ 
tion faces the acute danger of degenerating into a dreary series of 
compromises between irreconcilable “rights.” Any plan of in¬ 
dustrial arbitration which progresses beyond the stage of fashioning 
an armed truce will start by scrapping certain old and much- 
revered rights which are mutually contradictory in modern complex 
and cooperative society. Unless modifications can be brought into 


INDUSTRIAL PEACE 


225 


existence, conflict is inevitable. For example, the “right” to join 
a union and the “right” of the employer to discharge an employee 
for any or no reason, run counter to one another; one must give 
way. Another of the “rights” which is being seriously under¬ 
mined is that of a business man to operate his own business as he 
sees fit. In the field of the public utilities, in the railway world, 
and, to a lesser degree, in other industries, this right of arbitrary 
control by the owner has been greatly attenuated. Rate regu¬ 
lation, health and sanitary rules, laws in regard to the employ¬ 
ment of women and children and even of adult males, pure food 
laws, and building restrictions, are a few of the many ways in which 
the old idea of unrestricted private property rights is being under¬ 
mined. 

Business men who are in a strong position and whose vision has 
long been focused upon the familiar, are prone to distrust all in¬ 
novations; such men will object strenuously to new labor policies 
and to “more government in business.” Unfortunately, for their 
peace of mind, in industries affected with public interest it seems 
clear to the observer that either new labor policies must be adopted 
or there will be more and more government in that sort of business. 
Recently a representative of an old and important industry de¬ 
clared that the maintenance of its position “among the industries 
of our own nation that encroach on our present fields, is dependent 
on our maintaining the most receptive attitude we can toward 
new ideas and efficiencies of operation and distribution.” 

On the other hand, nearly all American labor organizations 
have come perforce to be primarily fighting groups with unlovely 
and industrially undesirable consequences. In order to keep a 
fighting machine in good condition, it is essential that war clouds 
constantly hover on the horizon. Something must be doing in in¬ 
dustrial relations to justify the payment of union dues and of of¬ 
ficers’ salaries; officials go around carrying chips on their shoulders. 
Recently certain very definite signs of change have appeared, giving 
promise of a new day in which unions may become interested in 
production problems, in matters of waste and efficiency. The new 
type of labor leader is primarily an industrial statesman who seeks 
the conference chamber instead of rattling the saber and giving 
publicity to manifestos of defiance. William Green and Sidney 
Hillman are representatives of the newer fashion in labor leaders. 


226 


LABOR PROBLEMS 


In the past, employers have in no small measure been responsible 
for making industry a battle-ground instead of a field for coopera¬ 
tive endeavor. Are they able to rise to the occasion now that labor 
is so near to being ready to join hands with management? If so, 
industrial leaders must be prepared to discredit the group of 
valiant, but misguided, employers’ associations which essay the 
role of union smashers. Like the fighting labor leaders they are 
behind the times; they still live, move, and have their being in the 
nineties of last century. 

Unfortunately, except in emergencies, the American public is 
prone to pay little attention to social and industrial problems. In 
the words of a worker, “the only time the public give a hang about 
the workmen of any industry is when they walk out, tying up some 
‘essential’ industry, thus hitting the public in the bread basket.” 
A strike in a key industry soon stirs up the public, “the Forgotten 
Folk”; but too often the manifestation is only one of crowd 
passion. The demand is reiterated that the strike must be ended; 
but no constructive proposals are or can be made at such a time. 
When no industrial disputes of great import are on is the time for 
calm consideration of the problem of ending strikes. And since 
labor must take the visible steps which discommode the public, the 
wrath of public opinion is almost invariably directed against the 
strikers. The “invisible government” is invisible; we cannot see 
the hand of the employer as he deftly sets the stage for the strike. 
We identify the precipitator as the instigator; the man who strikes 
the match is also believed to have spread the powder which ex¬ 
plodes. We need the searchlight of an investigation which will 
show clearly the steps leading to an industrial conflict. And, fur¬ 
thermore, before the public through legislation can with justice 
take away the “right to strike,” it must see that the workers are 
fairly treated in regard to hours, wages, and working conditions. 
In order to outlaw the strike, education as to the duty and interest 
of the general public is needed as well as a new attitude on the part 
of employers and workers toward one another and toward the 
community. 

It is quite clear that no governmental fiat will make an unwilling 
and recalcitrant functional group do its job efficiently. Plenty 
of bayonets may get something done; but it is an inefficient proc¬ 
ess. Force may negative certain impulses; but force can do little 


INDUSTRIAL PEACE 


227 


toward obtaining efficient positive results. Injunctions and bay¬ 
onets, for example, may force miners into the mines; but such 
crude measures cannot get coal mined efficiently or prevent much 
shrewd sabotage. To outlaw the strike in key industries without 
first educating the great mass of our citizenship in the theory and 
practice of individual activity for community welfare is almost 
inevitably to invite failure. 

If the strike is to be eliminated and industrial disputes settled by 
arbitration, the worker must be protected from arbitrary discharge 
and more subtle forms of discrimination, and he must be assured 
regularity of work at a yearly wage which is “fair.” Too many 
plans for arbitration begin with the proposition that the strike must 
be outlawed. A much better impression would be made upon the 
workers if such schemes clearly provided that the employer as well 
as the worker give up certain privileges. If the employee is to be 
required to surrender the important right of striking in order to 
better his working condition, the employer should at least be asked 
to give up the right of arbitrarily discharging any worker who has 
been employed longer than a short probationary period. The strike 
and the power of discharge are of comparatively recent origin; 
both have practically developed since the Industrial Revolution. 
For example, the feudal lord did not possess the authority arbi¬ 
trarily to thrust a group of workers out of work. Men in earlier 
epochs might experience famine, but not the dearth of a job. 

In our complex industrial world, the right to discharge is too 
important a matter to be placed in the hands of a capricious in¬ 
dividual. Much has been written about the ugly features of strikes; 
but little has been said about the suffering caused by the arbitrary 
discharge of breadwinners. To separate a man from his job is to cut 
off his source of income and often to reduce his family to want. The 
right arbitrarily to cut off the income of a family gives one person 
too much power over the destiny of others. The temporary loss of 
a job, irregularity of work, a reduction in the yearly wage, may 
mean “the beginnings of malnutrition and disease.” It may mean 
poorer food and insufficient clothing, a poorer, less sanitary, and 
more crowded home. It may spell premature child labor, the 
mother “taking in washings,” the gradual “losing of his grip” by 
the head of the family. Continuity of work and permanence of 
tenure of job will be translated into prosperous community life, 


228 


LABOR PROBLEMS 


into literacy and comfort, into health and optimism. Legalize the 
right of a worker in industries affected with public interest to hold 
his job as long as he is efficient — inefficiency to be determined by 
an impartial tribunal — and then the American people are in a 
strategic position to demand that the strike be outlawed in the 
same industries. 

In such agreements as that of the Amalgamated Clothing Work¬ 
ers with Hart Schaffner & Marx, we find the beginning of the 
notion that you shall not “ take a man’s job without due process of 
law.” Under the Constitution of the United States, it is not lawful 
to take property without due process of law. A job is a worker’s 
property as certainly as is the right to do business a property right. 
The outlawing of the strike may also lead to the demand for a good 
accounting system and good management. The state would proba¬ 
bly be obliged to extend control over business methods to the extent 
of requiring analysis and publicity of the accounts of a business. 
Let it be recalled that the corporation is a creature of the state;, 
it is created by governmental action. Consequently, if it does not 
prove to be of service to the community, it may be guided by 
legislative control into fields of serviceability or its life may be 
ended. The corporation is created primarily for service, not for 
private profit. 

If we are to insist upon outlawing the strike, the worker should 
be recognized, after a period of probation, as having a sort of 
vested interest in his job. Questions of firing, demotion, promo¬ 
tion, and transfer should be controlled by a definitely established 
semi-legal code. The ultimate decisions should be made by an 
administrative body in which both parties are represented. The 
home owner who has a stake in his community is praised as being a 
better and more responsible citizen than the renter and the tran¬ 
sient. In like manner, the worker who is liable any day to lose his 
job because of arbitrary decisions of his foreman or manager or 
because his employer has failed to regularize the business, cannot be 
expected to exhibit a high degree of loyalty, enthusiasm, or coopera¬ 
tion in connection with his job. Teamwork develops out of con¬ 
tinuity and permanence. 

The firm establishment of arbitration in essential industries will 
require mutual giving up of rights. The plan adopted must square 
with a sense of justice on the part of those not directly concerned. 


INDUSTRIAL PEACE 


229 


If the substitution of arbitration for strikes be forced against the 
wishes of the workers and without the firm support of public 
opinion, it will lead to an excessive use of sabotage or to the willful 
dilution of efficiency which may prove in the long run more disas¬ 
trous than a series of strikes. Labor, of course, cannot afford to 
accept as permanent the present status of that group. But the law 
is a “progressive science.” In recent decades the Supreme Court 
has stretched very greatly the meaning and practical significance 
of the police power. Public opinion reaches even to the confines 
of the highest courts. In like manner, the general acceptance of 
arbitration need not necessarily mean that labor must accept for all 
time the status quo. If arbitration inevitably meant the definite 
acceptance of the present status quo , labor could not fairly be asked 
to accept the plan. No class can be expected permanently to be 
joyfully satisfied with a subordinate and static position. Arbitra¬ 
tion must also be more than a process of emphasizing abstract and 
technical principles. The lawyer and the judge rarely understand 
the labor point of view. H. G. Wells points out that lawyers and 
workingmen are “antipathetic types.” Put arbitration in the 
hands of lawyers and the scheme will be wrecked. The training of 
the lawyer leads him to think in terms of the individualism of the 
pre-industrial period. 

Finally, are there indications which may reasonably lead to the 
conclusion that the exuberant individualism of the American is 
being reduced and that a sense of social responsibility essential to 
industrial peace is being instilled into individuals and groups? At 
least three tendencies may be noted. (1) Industrial technique 
demands today large numbers of cooperating workers of a variety 
of grades of skill and ability; it insists upon teamwork. But con¬ 
tinued experience in a team, in carefully articulated and interrelated 
working groups, inevitably tends to dilute individualism and to 
nurture deference to the needs of the group or of the community. 
In spite of much that is pure bunk in the platitudinous pronounce¬ 
ments for public consumption, the observer can scarcely fail to 
conclude that here and there organizations of employers and of 
wage workers, Chambers of Commerce, Rotary and Kiwanis Clubs, 
are beginning to develop in their membership a sense of responsibil¬ 
ity for community uplift and betterment. 

(2) The effect of public regulation of businesses “affected with 


230 


LABOR PROBLEMS 


public interest,” social insurance, and of legislation in regard to 
hours of labor, is to aid in pushing into the background the old idea 
of letting the public and the workers beware. There is also a 
development by legislative action, and more especially by judicial 
decision, of the notion that the rights of society are paramount. 
All of which is indicative of the trend toward emphasis upon social 
obligation. (3) The evolution of a new type of industrial managers 
and experts who are employees, not owners, is important. These 
men are becoming professional in spirit and in action. They are 
primarily interested in output and in service. They stress the 
profit-making motive only as the absentee and inactive owners put 
pressure upon them. 

It is, of course, expecting too much to anticipate that a group may 
defer its interests in important matters to the welfare of the com¬ 
munity. But when speculative elements are reduced to a minimum, 
the divergence of interests between the public on one hand and the 
owners, managers, and employees connected with a business on 
the other, tends to disappear. Legal recognition is given to the 
right of the investor to a contractual rate of interest unless the 
business is insolvent. If, in like manner, the community legally 
recognized the right of the worker to the continuity of a job and 
to an assured minimum yearly income as a first charge upon the 
business, a great element of risk would be lifted from the shoulders 
of the workers as a group. A business affected with public interest 
in which the speculative element is largely removed, in which the 
interests of investors and employees to continuity of return are 
protected, is one which is not likely to run counter to public 
interest and opinion. 

It is true that the investor will continue to look with favor upon 
a higher rate of return and the worker will likewise continue to 
yearn for higher and higher wages; but in view of the acquiescence 
on the part of railway investors in the recapture clause of the 
present railway legislation, and on the part of governmental em¬ 
ployees in wages as fixed in the service of the government, it may 
not be entirely irrational to anticipate the possibility of permanent 
industrial peace with efficiency in public service industries. The 
problem is one of applying science, common sense, and a spirit of 
fair dealing to those industries. The public in insisting upon con¬ 
tinuity of service must not be unmindful of the vital interests of 


INDUSTRIAL PEACE 


231 


the investor and of the worker in a public service industry. In no 
small measure, the hope of peace in such industries is in the hands 
of the community. 


REFERENCES 

Barnett, G. E., and McCabe, D. A., Mediation, Investigation, and 
Arbitration in Industrial Disputes 
Fitch, J. A., The Causes of Industrial Unrest, Chaps. 20 and 21 
Furniss, E. S., Labor Problems, Chap. 13 
Patterson, S. H., Social Aspects of Industry, Chap. 16 
Watkins, G. S., Labor Problems, Chap. 28 
Webb, S. and B., Industrial Democracy, Part 2, Chap. 2 


CHAPTER XIII 


COOPERATION BETWEEN MANAGEMENT 
AND MEN 

CONTROL IN INDUSTRY 

Students of history frequently point to certain pendulum-like 
movements which may easily be discerned in the past of the human 
race. From time to time, a new epoch appears which is markedly 
similar to some preceding era. Industrial progress exhibits several 
periods of ebb and flow. Feudalism gave way gradually as towns 
and gilds developed; presently the gild was displaced as the 
dominant factor by the wholesale-merchant group; in turn the 
industrial capitalist pushed himself into a position of power and 
importance; recently, the supremacy of the industrialist is being 
threatened by the financier or investment banker who has obtained 
his position through the control of credit facilities. These stages in 
industrial evolution are not sharply demarked one from another; 
the time of their appearance or disappearance is quite different in 
different nations. In view of this historical setting, it is reasonable 
to anticipate further shifting of industrial control. In fact, certain 
foreshadowings of coming transformations are already visible in the 
success of experiments in new types of industrial control such as is 
exemplified by the trade agreements with organized labor in the 
coal, stove, clothing, and railway industry, or by certain employee 
representation plans to be discussed in the following chapter. 

The worker of former days who made an entire article was not 
rigidly or minutely supervised. The line between management and 
labor was blurred and indistinct. With the rise of the industrial 
capitalist and of large-scale industry came greater and greater sub¬ 
division of labor, drafting and planning rooms, scientific manage¬ 
ment, centralized and detailed supervision, and impersonal relations 
between management and men. But unanticipated industrial 
difficulties and wastes have been encountered. A reaction away 
from rigid one-sided or autocratic control by representatives of the 

232 


COOPERATION BETWEEN MANAGEMENT AND MEN 233 

investors may be expected. A re-distribution of authority in in¬ 
dustry appears to be in the making. Trade agreements or collective 
bargains, personnel administration, employee representation, and 
“industrial democracy” are tokens of change. “The frontier of 
control” in industry is again moving toward the working group. 
Once more the line between management and men is beginning to 
lose its clear-cut distinctness. In sporadic instances workers are 
beginning to demand: No discharge without an explanation and a 
worthwhile reason. A slogan is in the making which will read about 
as follows: “No production without representation” in the councils 
of industry. Absentee direction accompanied by centralization of 
control in shop, mine, and store is losing its attractiveness. This 
form of management is under fire; it is being charged with the sin 
of inefficiency. Some form of joint management by the active, on- 
the-ground men may be immediately ahead. The recognition of 
workers either in the form of union or of non-union shop committees 
and the placing of actual power in the hands of such committees 
will tend to diminish interference on the part of outside labor 
leaders. 

Unlimited power in the hands of one person or one group in 
governmental or industrial affairs will sooner or later be used to 
the detriment of those without such authority. In industry, trade 
agreements of various kinds represent encroachments upon the 
traditional idea that the owner of a business may run it exactly 
as he sees fit. The development of trade agreements and of shop 
committees may be fairly compared to the extension of the political 
suffrage to all adults. It may represent the beginning of industrial 
citizenship. The substitution of a constitution and common and 
statute law for the arbitrary dictum of a powerful monarch has 
injected greater rigidity into the governmental structure; likewise 
a trade agreement system accompanied by the development of an 
industrial-constitutional system may bring about marked in¬ 
elasticity in industrial control. Democracy, whether in the politi¬ 
cal or the industrial field, is more clumsy and slower-moving than 
autocracy; but the movement for industrial democracy may be 
expected to move forward slowly and irregularly. 

Peaceful industrial relations are of mutual concern to manage¬ 
ment and to workers. The problem to be solved before employee 
representation can be in a high degree successful is that of finding 


234 


LABOR PROBLEMS 


common interests, of substituting “integration” for compromise 
which always leaves an aftermath of distrust and discontent. In 
integration, common interests are uncovered and common aims dis¬ 
cerned. A joint conference between representatives of management 
and men should be a “conference,” not a battleground. Repre¬ 
sentatives are sent to confer and, if possible,-to reach an agreement, 
not to fight or to “put one over” on the other. 

TRADE AGREEMENTS 

Trade agreements as to wages, hours, and other conditions of 
employment are made in conferences attended by representatives 
of both employers and employees. The first recorded case of a 
successful trade agreement system is found in England in i860. 
It was established by A. J. Mundella, a manufacturer of Notting¬ 
ham. In America several isolated and local cases of trade agree¬ 
ments appear before 1885; but the important trade agreement 
systems have originated since that date. Trade agreements are 
now made in many localities and industries in the United States. 
The system presupposed the existence of some form of labor or¬ 
ganization among the employees and also among the employers. 
Individual bargaining is now replaced by wholesale or collective 
bargaining. Instead of many separate agreements made between 
the employer and each workman, a single agreement is made which 
fixes during the life of the compact the conditions of employment for 
all workers in the establishment, or at least all within a given grade 
or class. The adoption of the trade agreement system does not 
mean that the employer and the employees have accepted any 
idealistic theory of the harmony of interests between labor and 
capital. A peaceful method of settling disputes as to wages, hours, 
and the like has been substituted for industrial warfare. A joint 
conference where the representatives of both parties bluff, higgle, 
and compromise takes the place of the strike and the boycott. 
Workmen are still anxious to increase their wages, and employers 
are eager to prevent such increases, but both are desirous of bring¬ 
ing about stable and calculable conditions in the industry. Both 
sides are trying to gain an advantage. Each understands the 
situation; but a cessation of work means no wages and usually no 
profits. Self-interest is a harmonizing as well as an antagonizing 


COOPERATION BETWEEN MANAGEMENT AND MEN 235 

force. The trade agreement has been called a treaty of peace which 
precludes an industrial war for a definite period. 

Labor organizations were formed primarily as fighting units; 
and many unions facing hostile employers are today ready to 
fight on short notice. The union has insisted upon collective bar¬ 
gaining but the strike and the boycott were always kept con¬ 
veniently within reach while the bargaining process was taking 
place. The more progressive unions of today, when dealing with 
employers who are willing to recognize them, hope to make the 
strike and the boycott unnecessary. Organized labor of the newer 
type, dealing with friendly employers, is eager to do teamwork with 
management. The older type of trade agreements, of which the 
system used for many years in the soft coal industry and in the 
stove industry is a fine example, was characterized by bluffing, hig¬ 
gling, and compromise, with the strike looming up as a dark cloud 
on the horizon in case there was imminent danger of a disagree¬ 
ment. The agreement system used in the men’s clothing industry, 
and the one followed by the Baltimore and Ohio Railway in its car 
shops, illustrate the new type of trade agreements. If this agree¬ 
ment system ceased to function, doubtless the strike might be 
used; but it is kept in the background. The prime interest centers 
around the formulation of a working agreement by means of which 
the industry will be kept functioning in a mutually satisfactory 
fashion. New and attractive levels in labor relations appear to 
have been reached in a number of instances. The newer forms of 
trade agreements require the development of standards. Account¬ 
ing will prevent many misunderstandings; but it will not answer 
the fundamental questions regarding what is a fair wage or a fair 
profit. 


EXAMPLES OF TRADE AGREEMENTS 

For years a large percentage of the soft coal mines of the United 
States worked under a joint conference agreement as to wages and 
other conditions of employment. The conferences were attended 
by representatives of labor and of coal operators. The four-state 
or central competitive field agreement — Pennsylvania, Ohio, 
Indiana, and Illinois — began in 1898. Separate state settle¬ 
ments were made in 1906. In 1908 and 1910, Illinois was not 
represented. From April, 1898 to April, 1922, there were fifteen 


LABOR PROBLEMS 


236 

wage settlements. The smaller union fields used the four-state 
agreement as the basis for other agreements. In 1919 and 1922, 
the system temporarily broke down. In 1924, an agreement was 
made to last for three years. In 1927, an agreement could not be 
reached. Since that time, agreements have been reached in Illinois; 
and a few local agreements have been made elsewhere. The decline 
in the strength of the United Mine Workers coincides with the 
breakdown of the agreement system. The period of success in the 
trade agreement system in the coal industry is practically the same 
as the long up-swing of prices. Of the fifteen wage settlements 
between 1898 and 1922, twelve provided for wage increases and 
only one for a reduction in the wage scale. 1 

The original plan involved sending a large number of delegates 
to the conference which was essentially a great market for labor 
power. At one conference in the Central Competitive Field in 
which were represented Western Pennsylvania, Ohio, Indiana, and 
Illinois, 195 operators and 450 miners appeared as delegates. Be¬ 
ginning with 1912, the number of delegates was reduced, and an 
equal number of operators and miners were chosen from each state. 
The real work of compromise and of the determination of the wage 
scale was done by a small committee, but a unanimous vote of 
the conference was necessary before any important matter could be 
settled. An agreement was usually reached, because both sides 
were aware of the momentous and far-reaching results of a failure 
to arrive at a settlement of differences. No provision was made for 
reference of controverted points to outside parties. The representa¬ 
tives of the miners sat on one side of the house and those of the 
mine owners on the other. The meetings were usually open to the 
public. According to one observer, “this annual interstate con¬ 
ference of the bituminous coal industry is the most picturesque 
and inspiring event in the modern world of business.” It was an 
industrial parliament on a grand scale. In these meetings the basis 
for the settlement of many problems involving the miners digging 
coal was provided. The trade agreement furnished the formula 
which settled day by day various questions about the terms and 
conditions of employment in the union coal mines. “Who shall 
be hired? Who shall be discharged, and for what causes? Was 
a man’s discharge fair? What shall be paid to the digger who has 
1 The Coal Age, April 3, 1922. 


COOPERATION BETWEEN MANAGEMENT AND MEN 237 

to clear away a pile of rock before he can begin to take out the 
coal which he is paid to dig? What adjustment should be made 
for the men who dig with pick and shovel, when machines take 
over their work?” Such were the questions for which the trade 
agreement plan provided a way of settling without resort to a 
strike. 1 

The trade agreement system has been successfully used for nearly 
a half century in the stove industry. Certain peculiarities in this 
business have made the desirability of some form of collective bar¬ 
gaining apparent. In this industry, the cost of labor is one of the 
most important items in the total expenses of production. The 
wages paid to molders amount to a large fraction of the entire 
manufacturer’s cost of product. This condition tends to intensify 
the effect of differences between employers and employees as to 
wages, output, apprentices, etc. And, in this industry, the costs 
may be easily ascertained. 

From the time of the first recorded strike in 1855 to the meeting 
of the first joint conference in 1891, many strikes occurred in the 
stove industry. Gradually a strong labor organization was evolved. 
Its growth was paralleled by the development of an association 
among the employers. These two organizations are known as the 
International Molders’ Union of America and the Stove Founders’ 
National Defense Association, 2 respectively. An important strike 
involving many cities and establishments took place in 1887. 
Both sides claimed to have gained a victory; but each learned to 
fear the strength of the other side. Soon after, negotiations were 
entered into which led to the establishment of a successful joint 
conference system, and to the systematic and peaceful settlement 
of controverted questions. The development of two strong, fight¬ 
ing organizations made for peace. The joint conference is only 
successful when the two opposing forces are strong, well-organized, 
and nearly evenly balanced. 

The first conference, held in 1891, adopted the following signifi¬ 
cant preamble. “ Whereas, there has heretofore existed a sentiment 
that the members of the Stove Founders’ National Defense As¬ 
sociation and the members of the Iron Molders’ Union of North 
America were necessarily enemies, and in consequence a mutual 

1 Bloch, L., Labor Agreements in Coal Mines, p. 19. 

2 Now called the Manufacturers’ Protective and Development Association. 


LABOR PROBLEMS 


238 

dislike and distrust of each other and of their respective organiza¬ 
tions has arisen, provoking and stimulating strife and illwill, 
resulting in severe pecuniary loss to both parties: Now, this 
conference is held for the purpose of cultivating a more intimate 
knowledge of each other and of their methods, aims, and objects, 
believing that thereby friendly regard and respect may be en¬ 
gendered, and such agreements reached as will dispel all inimical 
sentiments, prevent further strife, and promote the material and 
moral interests of all parties concerned.” 

The conference agreement between the employers and the 
molders in the stove industry provides for annual conferences to 
be attended by representatives of employers and of employees. 
These joint conferences are purely legislative in character; but the 
representatives of both sides come with full power to act upon 
wages and conditions of labor within the industry. In order 
satisfactorily to settle disputes, the following mechanism is pro¬ 
vided. “ Whenever there is a dispute between a member of the 
S.F.N.D.A. and the molders in his employ (when a majority of the 
latter are members of the I.M.U.), and it cannot be settled amica¬ 
bly between them, it shall be referred to the presidents of the two 
associations before named, who shall themselves or by delegates 
give it due consideration. If they cannot decide it satisfactorily 
to themselves, they may, by mutual agreement, summon the con¬ 
ference committee, to whom decision by a majority vote shall be 
final, and binding upon each party for the term of twelve months. 
Pending adjudication by the presidents and conference committee, 
neither party to the dispute shall discontinue operations, but shall 
proceed with business in the ordinary manner. ... No vote shall 
be taken except by a full committee or by an even number of each 
party.” The significant points are: (1) this method shall only be 
used where the majority of the employees of a member of the 
Defense Association are unionists; (2) strikes or lockouts are for¬ 
bidden while the matter is under consideration by the presidents or 
the committee; and (3) the conference committee, which is es¬ 
sentially a board of arbitration, is composed of an equal number of 
employers and employees. The employers strenuously objected to 
the use of outside parties who were not familiar with the business; 
and experience “has indicated that their [employers’] judgment 
was sound and practical.” In case a member of the Defense Asso- 


COOPERATION BETWEEN MANAGEMENT AND MEN 239 

ciation refuses to live up to the agreement he will be dropped from 
membership, and the union will be at liberty to order a strike. If 
a local union refuses to abide by the terms of a contract, it will be 
disciplined by the national organization. 

In the stove industry, prices of stoves and wages of employees are 
fixed by means of the joint conference system. Competition as to 
prices and wages is avoided. Instead of appearing in the form of 
price-cutting and wage-slashing, competition under this system is 
raised to a higher plane; it takes the form of an attempt to produce 
better quality of goods and to improve the efficiency of labor. The 
aim is to place all members of the stove manufacturers’ association 
on the same competitive level in regard to payments for labor 
power. In the coal mining agreements, partial equalization of 
competitive conditions was also attempted. This influence upon 
competitive conditions may offer a clue to the long life of these 
two trade agreement systems. One between the same union of 
molders and an association of foundrymen lasted only for a short 
time; but the element of equalization of competitive conditions 
was of course lacking because a great variety of foundries was in¬ 
cluded in the association. It has been suggested that the plan 
works well in the stove industry because it is in reality a combina¬ 
tion of employers and employees to keep up wages and prices. A 
joint conference carried on successfully for several years tends to 
remove certain speculative elements from the business, and to 
promote stability within the industry. But each individual firm 
in the association must maintain itself; the weak members are 
not kept in the business as is the case in the trust form of organiza¬ 
tion. 

The clothing industry is subject to great irregularity in employ¬ 
ment. Elaborate trade agreement systems have been formulated 
in a considerable number of clothing factories. The “protocol” 
agreement adopted in 1910 between a group of cloak, suit, and skirt 
manufacturers of New York and certain unions in the clothing 
trades was the forerunner of the present elaborate agreements made 
with the Amalgamated Clothing Workers. The protocol agreement 
provided for a “preferential” shop in which union conditions were 
to be maintained and union men were to be given preference in 
hiring. Provisions were made for settling all grievances by means 
of a joint board of grievances and a board of arbitration. A joint 


240 


LABOR PROBLEMS 


board of sanitary control was also established for the purpose of 
fixing standards of sanitation in the shops. Provisions were in¬ 
serted for disciplining contractors or employees who violated the 
terms of the agreement. The protocol was adopted after a strike 
in 1910 and was followed for over five years. A modified protocol 
was adopted in the dress and waist industry in 1913. The trades 
engaged in the women’s clothing industry have made extensive use 
of the trade agreement system. 

In the men’s garment industry, the pioneer and most noted 
agreement is that of Hart Schaffner & Marx. The plan was 
originally adopted in 1910 and has been renewed from time to time 
since that date. It was first made with the United Garment Work¬ 
ers, but is now made with the Amalgamated Clothing Workers. 
The company “accepted the principle that the goodwill of em¬ 
ployees was as necessary and desirable as the goodwill of cus¬ 
tomers.” A labor department was established and all relations 
between employer and employees were placed in charge of this new 
department. “The rule of caprice” in the matter of discharge 
was discarded and the right of arbitrary action taken from the 
foremen. An agreement was entered into with the Clothing Work¬ 
ers which provided for a definite and orderly consideration of 
grievances, for the elimination of strikes and lockouts, and for the 
preferential shop. 

When a grievance arises on the floor of a shop, the complainant 
reports the matter to the union representative in his section. The 
representative takes the matter up with the shop superintendent. 
If the controversy is not satisfactorily adjusted, it is reported to a 
shop deputy. Both employer and employees have deputies, who 
have the power to make investigations. A pair of deputies visit 
the shop in order to adjust the difficulty. If the deputies cannot 
reach a satisfactory agreement, the dispute is taken to the Trade 
Board. This Board consists of eleven members, one of whom is 
called the impartial chairman. The latter is chosen by the Board 
of Arbitration. The Trade Board is the primary court for the ad¬ 
justment of grievances. In actual practice, the number of members 
is not important. Decisions are made in writing by the impartial 
chairman. Appeal from the decision of the impartial chairman 
may be made to the Board of Arbitration whose decisions shall 
be final and binding on both parties. This body consists of three 


COOPERATION BETWEEN MANAGEMENT AND MEN 


241 


members — one representing each party and an impartial chairman 
chosen by agreement. Agreements in Rochester, New York, and 
other cities are similar to the one described above. This plan 
provides for the formulation of a set of rules or an industrial con¬ 
stitution for the industry, and specifies the methods to be used 
under the rules in settling disputes, by the use of an elaborate 
method of secondary arbitration. 

The agreement entered into between the Baltimore and Ohio 
Railway and the shop crafts in its shops is a new type of trade 
agreement. The unions concerned are definitely recognized and 
bargained with; but the prime object of this plan seems to be that 
of obtaining cooperation between management and men rather 
than of formulating a detailed scheme for settling disputes. The 
program which was initiated in 1925 provides for the reduction of 
waste, the improvement of shop methods, and the stabilization of 
employment in the railway shops. The benefits of joint action 
are to be shared between the company and the workers. A sugges¬ 
tion plan has been put into active use. The shop-craft unions have 
become constructive, rather than obstructive, forces in the railway 
shops of the Baltimore and Ohio. Representatives of organized 
labor and of the railway have testified that the plan has worked 
well to date. No satisfactory method has as yet been evolved of 
determining accurately the gains from cooperative action or for 
dividing such gains between management and men. This may, 
indeed, prove to be the obstacle which may endanger the life of the 
plan. Similar programs are being utilized by the Canadian Na¬ 
tional Railway, the Chicago and Northwestern Railway, and by 
other systems. 

The Naumkeag Steam Cotton Company of Salem, Massachu¬ 
setts, specializes in the production of plain sheetings. This 
company was organized in 1839. In 1919, a strike was precipitated 
by a refusal to grant a demand for higher wages. It was marked 
by the absence of violence and was amicably settled. With the 
resumption of operations, an attempt was made to remove the 
causes of friction between management and workers. A union- 
management cooperative plan was the outgrowth of conferences, 
and evolved into a formal agreement in 1927. The United Textile 
Workers of America were recognized and collective bargaining was 
accepted. A local shop committee plan was inaugurated for the 


242 


LABOR PROBLEMS 


purpose of adjusting grievances. The workers agreed to promote 
the sale of Pequot sheets and pillow cases and to aid in maintain¬ 
ing the quantity and quality of the output of the plant. In Decem¬ 
ber, 1928, a further and very significant step was taken. An 
engineer, agreed upon by the management and the union, was hired 
to make, with the assistance of the research committee of the plant, 
a study of proposed improvements, and to aid in fixing standards. 
It is a scheme for the application, with the consent of management 
and men, of technical skill to common problems. A joint study is 
made of methods for the elimination of waste and for the deter¬ 
mination of what is a fair day’s work. In the words of another 
describing this notable experiment in industrial relations, “ joint 
research uses the ability of the worker, saves the time and worry 
of the manager, changes obstruction to construction.” ... “A 
technician” is used instead of a policeman, “mutual adjustment 
instead of firearms, slide-rules instead of bullets.” Scientific man¬ 
agement methods are applied with the consent of both manage¬ 
ment and men, fair wages are paid, job standards are set only after 
careful investigation, and competition is successfully met. This 
is a fine example of the possibilities of teamwork in industrial 
relations. 1 

THE SIGNIFICANCE OF TRADE AGREEMENTS 

The trade agreement system is a within-the-industry or within- 
the-family scheme. The newer form as exemplified in the Baltimore 
and Ohio plan or in that used by the Naumkeag plant, is a new 
and promising step toward finding common interests in better 
operation of the industry. Clearly, it is possible and practicable 
to work out a plan for the substitution of trade agreements with 
unions for industrial conflict. Out of trade agreements with 
organized labor or out of the growth of employee representation 
may come a new era in the relations between management and 
men. It is the old problem of seeking for common interests amid 
the chaos of industrial conflict and mutual suspicion. Good per- 

1 Bulletin of the Taylor Society, April, 1930; Soule, G., The New Republic, 
Jan. 1, 1930. The Naumkeag plan was terminated in the fall of 1932. Three 
factors are said to have caused the breakdown: (1) demoralized labor markets 
and the weakening of the union because of unemployment; (2) lack of faith on 
the part of the union in certain of the plans of the management; and (3) “plant 
politics.” The Survey , Nov. 15, 1932, p. 609. 


COOPERATION BETWEEN MANAGEMENT AND MEN 243 

sonnel management is emphasizing the same idea probably from a 
somewhat different angle of vision. 

REFERENCES 

Bloch, L., Labor Agreements in Coal Mines 

Budish, J. M., and Soule, G., The New Unionism in the Clothing Industry 
Mead, G. W., “Why I Unionized My Plant,” Factory and Industrial 
Management, Feb., 1928 

Morehouse, E. W., “Development of Industrial Law in the Rochester 
Clothing Market,” Quarterly Journal of Economics, Vol. 37, pp. 257- 
290 

Patterson, S. H., Social Aspects of Industry, pp. 404-407 

Watkins, G. S., Labor Management, Chap. 32 

Wood, L. A., Union-Management Cooperation on the Railroads 


CHAPTER XIV 


EMPLOYEE REPRESENTATION 

WHAT IS EMPLOYEE REPRESENTATION? 

At the opening of the discussion of employee representation, it 
may not be superfluous to point out again that the labor question 
is complex. Nicely worked out, made-to-order solutions are not 
to be expected. It has been well said that the man with easy 
solutions is an evil in a democracy. Conciliation, arbitration, 
compulsory investigation such as has been used in Canada and 
Colorado, trade agreements with organized labor or employee rep¬ 
resentation through shop committees, are attempts either at 
smoothing out a local difficulty or finding a way toward better and 
more peaceful conditions in industrial relations. Trade agreement 
plans are laboratory experiments looking toward the reduction of 
friction in industry and toward increased efficiency and output. 
Doubtless each shop or establishment represents a special problem 
of its own. It is a clinical case. If, however, we are able to point 
out certain fundamentals in regard to human nature or in regard 
to the causes of unrest, if we see what hopeful experiments have 
been made and what mistakes have been made, we may be able 
to take steps leading toward a new and more peaceful industrial 
era. If we are to get anywhere, labor difficulties should be thought 
out rather than fought out. It may not be a mistake to reiterate 
the point that the old fundamentals play a large part in ironing 
out labor difficulties. What is meant by the old fundamentals? 
Fair and sympathetic treatment of workers, the application of the 
Golden Rule, an attempt to see the other man’s point of view and 
to make allowances for his weaknesses and his prejudices, consid¬ 
eration for the rights of others and for their hopes and aspirations, 
will go far toward reducing friction. 

Broadly speaking, two varieties of employee representation may 
be distinguished: ( a ) a shop committee without connection with 

244 


EMPLOYEE REPRESENTATION 


245 


a labor organization; and ( b ) a committee functioning as a part 
of the mechanism of one or more national labor organizations. The 
first type only will hereafter be referred to as a shop committee. 
The second may be satisfactorily designated as the union shop 
committee, or a union-management plan. It functions as a part 
of the mechanism of a trade agreement system. The two are not 
entirely dissimilar in methods and results. The union shop com¬ 
mittee is a local grouping which supplements the work of the 
national unions and their locals. Although at the present time 
organized labor in the United States is emphatic in its opposition 
to the shop committee, or company union, it does not appear that 
the shop committee need necessarily be a substitute for unionism 
of the orthodox type. The shop committee may prove finally to 
be a form of labor organization supplementing and reenforcing 
rather than displacing the union. 

A shop committee which has no connection with organized labor 
and in which all employees are allowed a voice in selecting the 
members of the committee, is similar in form to a local closed-shop 
organization with an open union of the industrial form. As usually 
organized, it is a “company union” of all the employees of the 
plant. Primarily, a shop committee is a one-plant affair, although 
it is practicable to form a federation of shop committees. The 
problems of the shop committee as organized at the present time 
are chiefly local; and, furthermore, it possesses all the weaknesses 
of a local union without national affiliations. To its membership, 
representatives of the management may be admitted; it then 
becomes a joint committee. The shop committee gives workers 
an insight into plant problems they cannot otherwise obtain, and 
it affords the management an idea of the workers’ point of view 
and difficulties. A properly organized and recognized shop com¬ 
mittee makes for mutual understanding, for teamwork. Under 
this plan, the interpretation of an agreement is placed in the hands 
of local men familiar with the details of the situation. If plant 
quarrels are ended, the sphere of action of walking delegates and 
outside agitators is greatly reduced. Ordinary union meetings are 
usually not well attended. Consequently, radicals and malcon¬ 
tents often gain the upper hand. Shop-committee meetings held 
in the shop — the natural place for a union meeting — will draw a 
good attendance. The necessity for holding union meetings outside 


246 


LABOR PROBLEMS 


the shop emphasizes the fighting character of the typical union, 
for which employers are largely responsible. 

Employee representation is primarily a plan for obtaining co¬ 
operation and promoting mutual understanding between manage¬ 
ment and men. It uses the principle of consultation about matters 
of mutual interest in shop operation. If successful, it will gradually 
give the workers confidence in themselves and in the ability of their 
group. Employee representation will cause the worker to feel 
that he is an “insider,” instead of a “foreigner” who could be 
banished for trivial reasons from the industry in which he is em¬ 
ployed. Through the contacts provided by employee representa¬ 
tion, the workers will gain an insight into some of the problems 
of business technique; they will appreciate in a larger measure 
the difficulties with which the management must cope. On the 
other hand, the management will be given an opportunity to visual¬ 
ize the fears and the hopes of the rank and file of wage workers. 
The important contrast between the shop committee plan and a 
union may be summarized as follows: The shop committee repre¬ 
sents only one plant or is local in scope; the union is national. 
The shop committee is usually installed by the management in 
order to obtain cooperation; the union is organized by workers 
and as a rule it is founded on the idea of strengthening the working 
group in conflict with their employers. Members of a shop com¬ 
mittee do not pay dues and the meetings are usually held in the 
shop. 

HISTORY AND GROWTH OF THE SHOP COMMITTEE 

The shop committee or the works’ council is comparatively new 
in industry. It is in the pioneer, experimental, or unstandardized 
stage. In Germany, the establishment of works’ councils is com¬ 
pulsory; in England and in several other European countries, 
considerable use has been made of the plan; in the United States, 
the first example of the use of a shop committee without connection 
with a union seems to have been in the Filene store in Boston, be¬ 
ginning as an insurance committee and gradually increasing its 
functions and powers. The Filene Cooperative Association of 
today may be traced back to this humble beginning in 1898. In 
1903 the Nernst Lamp Company of Pittsburgh established a shop 
committee. The American Rolling Mill Company, in 1904, in- 


EMPLOYEE REPRESENTATION 


247 


itiated an “advisory committee” plan; and in 1907, the Nelson 
Valve Company of Philadelphia experimented with a shop com¬ 
mittee. Of these three attempts, the second only is now in exist¬ 
ence. In 1911 the Mitten plan on the Philadelphia Rapid Transit 
lines was inaugurated. Also, in 1911, the Hart Schaffner and 
Marx plan utilizing a union shop committee was adopted. In 
1912 the Packard Piano Company of Fort Wayne adopted the 
Leitch or governmental plan of employee representation. Three 
years later, the initiation of the Rockefeller plan by the Colorado 
Fuel and Iron Company marks the first use of the shop committee 
by a large corporation. 

During the War, many works’ committees were established under 
the guidance of the National War Labor Board. A considerable 
number of companies in 1918, 1919, and 1920, harassed by the 
growing independence of workers and the failure of the old methods 
of discipline, adopted personnel management, employee representa¬ 
tion, welfare work, house organs, profit sharing, or other schemes 
in an endeavor to reduce labor turnover and to increase the 
efficiency of the plant. When the crisis of 1921 occurred, many 
of the plants whose managers considered these “new-fangled” 
plans only as temporary expedients to meet a bad situation scrapped 
them and returned to the old-fashioned methods of “keeping labor 
in its place.” House organs were discontinued, welfare plans were 
abandoned, personnel departments were discontinued, and shop 
committees were shorn of their powers or discontinued. However, 
a considerable number of personnel departments and employee- 
representation plans weathered the storm; the movement is now 
on a firmer footing and bids fair to grow more gradually, but 
certainly. It was estimated in 1926 that one to one and one-half 
million workers employed by over five hundred companies were 
participating in non-union employee-representation plans. Another 
estimate is that, in 1928, about one million seven hundred thou¬ 
sand employees were under some form of the shop-committee 
system. There was little indication that small concerns employing 
less than two hundred workers would utilize the formal shop- 
committee methods. In 1926 employee-representation was espe¬ 
cially important in public utility companies. 


248 


LABOR PROBLEMS 


CLASSIFICATION 

According to representation, shop committees may be divided 
into three types: (a) Representative. The employees in the shop 
are divided into groups and each group chooses a representative. 
All employees not connected with the management are voters; 
the committee is composed of representatives chosen by the 
voters. ( b ) Governmental. The form of the government of the 
United States is imitated. The organization consists of two houses 
and a cabinet. The lower house is composed of representatives of 
the workers as in the representative type. The upper house or 
senate may be composed of foremen; or it may contain a smaller 
number of representatives of the workers than the lower house. 
The cabinet is composed of executives, (c) Joint Committee. 
This form includes in its membership representatives of the 
management as well as of the employees. 

According to the power allowed, shop committees may be placed 
in three pigeonholes: (a) Management committees appointed by 
the management to do specific things. As a rule, such committees 
possess only advisory power. However, in some cases, authority 
may be delegated to the committees. In one organization, a com¬ 
mittee was given charge of the rental and management of the 
houses owned by the corporation and rented to workers. ( b ) Lim¬ 
ited Power. The members of the committee are elected by the 
workers but the management has complete veto power over the 
action of the committee. ( c ) Unlimited Power. If the manage¬ 
ment and the committee cannot come to an agreement, the difficul¬ 
ties are to be settled by arbitration. In at least one case, the workers 
now have control of the majority of the stock of the company. 
In this case, a condition approaching producers’ cooperation may 
obtain. 


FUTURE POSSIBILITIES 

The shop committee initiated, fostered, and directed by the 
employing group cannot be a potent instrument in the hands of 
workers. It is local and employer-dominated. Not until the shop 
committee gets away from employer control and begins to take on 
the essential features of unionism — independence and ability to 
paddle its own canoe — can it be expected to become a potent 


EMPLOYEE REPRESENTATION 


249 


factor in the evolution of industrial democracy. As a coercive 
agent the shop committee is weak. If the employer continues to 
feel that it is necessary to combat labor, the shop committee is 
practically useless. Under this system the workers are deprived 
of outside experts. The shop-committee system cannot protect 
the “fair” employer against the “unfair” competitor. The union 
is often able to do so. But the “fair” plant with a good shop-com¬ 
mittee system may achieve such a high grade of efficiency that it 
need not fear the “unfair” employer who aims to keep labor “in 
its place.” 

If employee representation is worth anything, it must be entered 
into as a straightforward scheme for developing industrial peace 
and harmony. If it be fostered by employers as a subtle way of 
destroying the efficacy of unions and of making the workers sub¬ 
servient while hugging the shadow of power, the committee system 
will in the long run avail little. But, if initiated as an honest 
effort to introduce teamwork, interest, and enthusiasm into a 
common enterprise, the committee system has great possibilities 
in improving the efficiency of production methods and in the 
modification of industrial management and control. 

If a plan for employee representation is adopted, the members 
of the committee should be given something worthwhile to con¬ 
sider. A shop committee which is a mere plaything to amuse the 
workers and to keep them contented by playing with the symbols 
of authority will, sooner or later, probably sooner, be looked upon 
with indifference by the workers. Even an advisory committee 
whose activities are approved by the management and whose 
recommendations are treated with respect, will go far toward 
establishing goodwill. When the recommendations of the' com¬ 
mittee are rejected, definite reasons should be carefully presented. 
Through a shop committee, the plans and programs of the manage¬ 
ment may be passed on to the workers. Much suspicion and unrest 
may be prevented by open and frank statements as to managerial 
policies. Through discussion and criticism of the managerial 
program by the representatives of the employees, modifications 
may be made which will reduce friction. The airing of grievances 
will prove wholesome. Every well-developed plan of employee 
representation will provide for an orderly and fair consideration 
of grievances. 


250 


LABOR PROBLEMS 


The growth of the power of representative assemblies and the 
decline in the authority of the Crown in the realm of political 
affairs in Great Britain may be pointed to as indicative of the 
possible trend of affairs in the industrial field following the intro¬ 
duction of the shop committee — a representation system. Rep¬ 
resentative government developed very slowly in England. The 
expenditures of the kings increased; and it became imperative for 
them to find new sources of income. From time to time, rep¬ 
resentatives of the boroughs and counties were called to London 
to consult with the king and his advisers in regard to the best 
scheme for getting supplies from the people with a minimum of 
friction. 

Gradually a bargain and sale method evolved. The representa¬ 
tives of the people agreed to grant supplies if the king would make 
certain concessions. Such petitions presently became a part of 
the customary procedure in the early Parliaments. Later the 
petition was transmuted into a bill; and the taxing power was 
slowly acquired by Parliament. After centuries, Parliament which 
began as an advisory body became the most important arm of the 
government and the king became an amiable figure-head. The 
calling together of the representatives of the different groups 
and districts proved to be the opening wedge which several cen¬ 
turies later led to the complete transfer of power from king to 
Parliament. The humble petitions of the first irregular Parliaments 
to the king for favors in return for acquiescence in paying taxes 
finally became legislative enactments which the Crown no longer 
dares to veto. Out of a very insignificant beginning came the 
first great modern legislature — the British Parliament. Over 
four hundred years (1215-1689) were necessary to complete the 
transfer of the power of taxation from the king to Parliament. 

It is quite possible that control in industry may pass through a 
similar evolution. An optimistic spirit may today discern the first 
faltering steps in such a movement. The breakdown of absolutism 
in industry has been going on for some years: (1) in the extension of 
interference on the part of government, and (2) in the growth of 
collective bargaining and recently of employee representation sys¬ 
tems. Shop committees have been organized to help harassed 
employers obtain greater output and improved efficiency from their 
employees; to ascertain the causes of friction within the plant and 


EMPLOYEE REPRESENTATION 


251 


reduce the amount; to overcome apathy, opposition, and unrest 
among the rank and file of employees. Few of the shop committees 
have as yet been given much power; but, once organized, employ¬ 
ers like the British kings will find it difficult to go back. Today, 
in certain cases, considerable responsibility and authority have 
been placed in the hands of shop committees, union or non-union. 
Industrial control is now undergoing gradual changes which may 
prove to be important and revolutionary. If the analogy between 
political and industrial government holds, these weak experimental 
shop committees may become powerful and dominant factors in 
industrial control. The shop committee represents pioneering in 
industrial control; it is an experiment in industrial government. 
Like the early pioneering in parliamentary government, it may lead 
to many important and unexpected results. A new “frontier of 
control” has appeared in the industrial world. As of old, the line 
between management and men is beginning to lose its clean-cut 
distinctness. Absentee control in shop and in union, and extreme 
centralization of authority, are losing their attractiveness. These 
forms of control are under fire; their efficiency and desirability 
are in question. The development of trade agreements and the use 
of employee representation are steps toward industrial citizenship; 
the workers are given some voice in management policies. 


INSTALLING EMPLOYEE REPRESENTATION 

At least five methods may be used for initiating a shop-com¬ 
mittee plan. (1) The management may prepare plans without 
consultation with the workers. The plan may be declared in 
operation by an executive order or the workers may be asked to 
vote upon the adoption or rejection of the management-made plan. 
This method should never be used; it defeats the purpose of the 
plan. Arbitrary methods do not generate goodwill and interest 
among the workers. (2) The management may outline the general 
principles of a plan at a meeting of all employees or of a representa¬ 
tive group of employees. If received favorably, a committee of 
employees will be selected to work out the details. (3) An outside 
expert may be hired to prepare a suitable plan and “sell” it to 
the workers and perhaps also to the management. This method 
is now rarely used. (4) A joint committee selected from the work- 


252 


LABOR PROBLEMS 


ers and the management may be organized to draft a plan and pre¬ 
sent it for the approval of both parties. (5) A well-developed 
shop-committee plan may be gradually evolved out of an existing 
special committee, such as one on safety. Function after function 
may be added to the work of the original committee. The fourth 
and fifth plans are the ones most likely to allay suspicion and to 
develop a spirit of mutual trust and understanding between man¬ 
agement and man. 1 

EXAMPLES OF EMPLOYEE REPRESENTATION 

An example of the informal type of shop committee has been 
used for over a decade in the Browning Company of Cleveland. 
This plan is the creation of Sheldon Cary, the president of the 
company. The shop committee consists of two representatives 
elected from each department of the plant. Mr. Cary meets the 
committee informally twice a month. Matters relating to produc¬ 
tion methods and other topics of interest are freely discussed; 
suggestions are welcomed. No voting takes place; but the minutes 
of the meeting are posted on bulletin boards in the factory. Mr. 
Cary believes in placing “all of his cards on the table.” The 
Browning Company operates a comparatively small plant employ¬ 
ing skilled men. The personal or intangible element seems upper¬ 
most in this simple plan of procedure. 

The Industrial Representation Plan of the Goodyear Tire and 
Rubber Company is an elaborate scheme of the governmental 
type. All executive power is vested in the management; but 
considerable legislative powers appear to be vested in an Industrial 
Assembly composed of a Senate and a House of Representatives. 
The membership of these two bodies is made up entirely of em¬ 
ployees elected by secret ballot. The Senate is composed of twenty, 
and the House of forty members. In order to be a senator an em¬ 
ployee must be at least twenty-five years of age and on the pay-roll 
for at least five years. The qualifications for membership in the 
lower house are less exacting. Every bill passed by the two houses 
must be presented to the manager for his signature before it be¬ 
comes a factory rule. A vetoed bill may be passed over the head 
of the manager by a two-thirds vote in each house. It then 
1 See Harvard Business Review , Oct., 1923. 


EMPLOYEE REPRESENTATION 


253 


becomes a factory rule. The company guarantees that there shall 
be no discrimination against any member of the two houses, or 
because of membership in any labor organization. 

In the Colorado Industrial Plan adopted by the Colorado Fuel 
and Iron Company, and with modifications by other Rockefeller 
interests, representatives are chosen, using a secret ballot, by the 
employees of each plant. Joint committees composed of these 
representatives and an equal number of officers of the company are 
organized in each plant. “These committees deal with all matters 
pertaining to employment and working conditions, including ques¬ 
tions of cooperation and conciliation, safety and accident, sanita¬ 
tion, housing and health, recreation and education.” Joint district 
conferences are provided for and a joint conference of representa¬ 
tives from all districts is to be held annually. Provision is made 
for settlement of grievances. Any worker may take up a grievance 
with his representative. Unless it can be settled in some intervening 
step, the matter may be carried to the highest officers of the 
company and, finally, to State officials, or to an arbitration com¬ 
mittee. This plan affords an orderly way for the consideration of 
shop matters and a definite method of bringing grievances to the 
attention of the responsible heads of the company. 

Since 1919 the International Harvester Company has used a 
shop committee plan. The committees are expected to consider 
and make recommendations in regard to safety, sanitation, wages, 
hours of labor, recreation, etc. One of the most interesting plans 
for employee representation has been that used in the Filene store 
in Boston. Recent financial changes in the organization may 
involve modifications in the employee representation plan. All 
employees of the store belong to the Filene Cooperative Associa¬ 
tion. This organization through a representative council may 
modify or cancel store rules. A veto by the management may be 
overridden by a three-fourths vote of the council. An arbitration 
board composed entirely of employees has final power over griev¬ 
ances and disputes. This experiment in employee participation 
and management, carried out by a group of forward-looking men, 
has led to the conclusion that the workers in this enterprise were 
not interested in placing upon their own shoulders the responsibili¬ 
ties of active participation in management. In this store, employee 
representation has been supplemented by placing employees upon 


254 


LABOR PROBLEMS 


the board of directors of the corporation. 1 This plan has also been 
used by the Dutchess Bleachery Company. 

A remarkable experiment in employees’ representation has been 
carried on since 1917 by the Columbia Conserve Company operat¬ 
ing a small canning factory in Indianapolis. The number of 
employees is less than two hundred, nearly all of whom are 
recognized as permanent workers and paid a yearly wage. The 
plan places the control of the business in the hands of a council 
composed of all of the regular workers. This council determines the 
policy of the company in regard to wages, hours, employment and 
discharge, and the selection of departmental heads. Wages are 
paid according to needs instead of output. Unmarried workers 
were paid, in 1931, $22.00 per week fifty-two weeks per year. A 
marriage differential of $11.00 per week was allowed. A married 
worker ordinarily received $33.00 per week. An additional amount 
up to $39.00 was allowed for dependent children. A needs com¬ 
mittee of the council may allow additional amounts in special cases. 
A profit-sharing bonus of 10 per cent of the basic wage of $22.00 
was also paid. In case of illness, or of regular vacations, the weekly 
wage was paid. Employees and their dependents received without 
cost medical and hospital care. A pension system has also been in¬ 
corporated. For some years the profits, after paying the stock¬ 
holders a fixed dividend and allowing the workers the 10 per cent 
wage bonus, have been used to buy stock from the owners. This 
stock has been placed in the hands of trustees for the workers as a 
group. In 1930 the amount held by trustees became more than 
50 per cent and the actual control of the corporation passed into 
the hands of the employees. The experience of this firm whose 
workers are certainly not above the average in ability indicates 
that many of our commonly accepted notions in regard to incentives 
and wage payments may prove to be without a firm foundation. 
Here is a factory operating successfully in a competitive industry 
since 1917 in which yearly wages are paid according to needs, and 
in which disciplinary regulations are in the hands of the workers. 
It is not easy for many of us to accept the evidence presented by 
this experiment but the facts seem to be,as outlined above. 2 

1 La Dame, Mary, The Filene Store. 

2 See pamphlet entitled An Experiment in Industrial Democracy by W. P. 
Hapgood (1931). 

In 1931 and 1932, the sales of the Columbia Conserve Company suffered 


EMPLOYEE REPRESENTATION 


255 


EMPLOYEE INTERVIEWING 

An interesting variant of employee representation is found in the 
systematic interviewing of employees in order to obtain an insight 
into their point of view. It may be called “a plan for improving 
employee relations on the basis of data obtained from employees.” 
This plan grew out of an ambitious piece of industrial research 
carried on in the Hawthorne Works of the Western Electric Com¬ 
pany. The results of the interview are kept strictly confidential. 
A technique of interviewing has been developed which is yielding 
important results. After a short experience with employee inter¬ 
viewing, four effects were noted. (1) The employees were given 
an excellent opportunity to express their grievances. Their morale 
was improved because the company evidently considered their point 
of view worthwhile; and the employees interviewed were easier 
to supervise. (2) The management received definite information 
in regard to employee attitudes. (3) The operation of the plan 
improved the character of supervision. (4) As a consequence, the 
training of supervisors was improved. For the first time in this 
plant, employees were in a position to criticize their supervisors 
freely. These criticisms were used as a basis for developing methods 
of supervision which would reduce certain elements of friction in 
industrial relations, or which would aid in developing a sympathetic 
understanding of the fundamentals in human relationships as found 
in industry. This study has also strengthened the idea that the 
relations between foremen and other supervisors and the employees 
are of first importance in the development of morale and goodwill 
among the latter. 1 

considerable reduction. Profits disappeared and the organization faced a 
deficit. The council met this unfortunate situation by “deferring” wage pay¬ 
ments, by reductions in wages, and by passing occasional weekly pay-rolls. As 
a consequence of the depression, industrial democracy in this firm has been 
subjected to severe stresses and strains and has experienced “emotional dif¬ 
ficulties.” Some of the regular workers have withdrawn; but the company bids 
fair (October 1, 1932) to live through the period of distress without important 
modifications in the plan outlined above. 

1 Putnam, M. L., The Personnel Journal , Feb., 1930; also see Kornhauser, 
A. W., and Sharp, Agnes A., The Personnel Journal , April, 1932. 


256 


LABOR PROBLEMS 


REFERENCES 

Burton, E. R., Employee Representation 
Carver, A. H., Personnel and Labor Problems 
Commons, J. R., Industrial Government 
Feis, H., Labor Relations 

French, C. E., The Shop Committee in the United States 
King, W. L. M., Industry and Humanity, Chaps. 10 and 
La Dame, Mary, The Filene Store 
Lauck, W. J., Political and Industrial Democracy 
Leitch, J., Man-to-Man 

Myers, J., Representative Government in Industry 
Watkins, G. S., Labor Management , Part 7 
-, Personnel, Feb., 1928 

-, The Personnel Journal, Feb., 1930, and April, 1932 


CHAPTER XV 


METHODS OF COMPENSATION 

WHAT IS A FAIR WAGE? 

Before considering plans for the payment of wages, an attempt 
should be made to answer the question: What is the proper method 
for determining a just or fair wage? No elaborate discussion of a 
theory of wages should find a place in a study of industrial rela¬ 
tions, but it is fitting and important that some consideration be 
given to the question of the determination of a fair wage. An at¬ 
tempt to ascertain what is a fair wage, a reasonable or just price, 
or a fair profit brings the inquirer face to face with certain ethical 
considerations; but the so-called laws of economics relating to 
supply and demand, competition, and the like, are not ethical. 
There are in economics no yardsticks which will accurately 
measure what a man earns or what profits an enterpriser should 
receive. One calls a practice or a payment “fair” which does not 
run counter to his notions of justice or of square-dealing. How¬ 
ever, individuals and groups with different experiences, training, 
and interests differ greatly in concepts about justice and fairness. 

In medieval times a fair wage was easily and summarily de¬ 
termined by means of the inelastic measuring rod of status or of 
class distinction. Medieval writers and jurists were very clear in 
their conception of fair prices and fair wages. “ Man, they taught, 
had been placed by God in ranks or orders, each with its work to 
do, and each with its own appropriate mode of life. That gain was 
justified, and that only which was sought in order that a man 
might provide for himself a fit sustenance in his own rank.” 1 A 
man could easily determine for himself, without resort to techni¬ 
calities or courts of arbitration, the proper price for commodities 
or labor time by calculating what was needed to support himself 
and his family in accordance with his status in life. Each class 
in the community had its own rather definite and customary stand- 
1 Ashley, W. J., Economic History and Theory , Book 2, p. 389. 

257 


LABOR PROBLEMS 


258 

ard of living; and the summit of personal ambition was success 
within a limited social and economic sphere rather than progress 
from one class to the next higher. Ambition was curbed and 
chastened by the great fact of birth within a given social compart¬ 
ment. Prices and wages were to be so regulated as to maintain 
class immobility. 

With the downfall of medievalism and the passing of mercantil¬ 
ism came the rise of the laissez faire philosophy. It was assumed 
that prices, rates, and wages were fixed automatically by the 
ceaseless action of free and untrammeled competition. The ques¬ 
tion of wages offered no difficulties provided free competition was 
not interfered with. But today the existence of numerous public 
utility commissions and boards of arbitration is a concrete and un¬ 
mistakable warning that competition is not the active, living force 
or principle which economic theory has often so vividly and 
enthusiastically pictured. The various and sundry attempts to 
fix fair prices, living wages, and reasonable rates definitely point 
toward the general acceptance of the view that competition does 
not act as many economic theorists have dogmatically argued. 
Day after day the competitive field is being gradually narrowed. 
In the economic field the investigator of today may find a variety 
of returns, many of which were unknown in the idealistic realm 
pictured by the classical economists. At present every thinking 
person recognizes that certain lines of industrial activity are in a 
large measure outside the competitive sphere. For example, rail¬ 
way and street railway fares, rates for gas, electricity, water, 
telegraph and telephone service are no longer fixed by the competi¬ 
tive process. Monopoly is a potent factor in the economic world; 
it cannot be neglected in any careful study of wages and profits. 
The productivity theory of wages, as well as many other familiar 
theories in the field of economics, is grounded upon the fundamental 
postulates of free competition. If, however, economic friction is 
present, such theories cannot be accepted as infallible guides. 

With the narrowing of the competitive field the question as to 
what is a just and scientific standard of measurement for wages, 
prices, and rates becomes increasingly important; and, at the 
same time, it becomes much more difficult to solve because the 
basis for competitive wages, prices, and rates is being undermined. 
Much of the current discussion and theorizing as to the rights of 


METHODS OF COMPENSATION 


259 


labor and of management is futile because either the existence of 
free competition is assumed, or reference is made to wages and 
prices paid in the past, or some arbitrary standard is postulated 
which has no validity beyond the personal desires of certain in¬ 
dividuals or classes. 

No court of arbitration or board of mediation has as yet offered 
any definite and scientific formula by means of which disputes as to 
wages or conditions of labor may be adjusted. Nothing has been 
discovered to replace the discarded standard of medievalism or the 
automatic process of the laissez faire system. The finding of a 
board of arbitration is merely a compromise which removes the 
immediate difficulty; the root of the matter is never laid bare. 
An anxious public is not given any exact data; no definite method 
of procedure is presented which may be used as a basis for the work 
of other boards which may be organized at some future date. 
Courts of arbitration and boards of mediation frequently study the 
physical, social, and economic conditions in the industry to which 
their attention is directed. The home and working environments of 
the workingman are investigated, a careful estimate of the house¬ 
hold budget is often made, and the condition of the workers in that 
industry and locality may be compared with that of employees 
in other industries and localities. Statistics showing changes in 
productivity are usually presented. Our concept of a fair wage 
is as yet very elusive and indefinite. Subjective, rather than ob¬ 
jective, considerations seem to have the greatest weight. In this 
respect a marked contrast may be discerned between the modern 
and the medieval point of view. Negatively stated, it may be con¬ 
fidently urged that an extremely low wage, such as is paid in the 
sweated industries, is not a fair wage. A positive statement may 
assume the following form: An adequate theory of fair wages and 
fair profits must stand upon the firm foundations of equality of 
bargaining power and of opportunity. Inherited, artificial, and 
special privileges are obstacles to fairness in economic relation¬ 
ships. 1 

With the exception of a few radical groups committed to the 
doctrines of Socialism or Communism, organized labor in the United 
States accepts the present economic order. Organized labor as¬ 
sumes that the capitalist-employer is a necessary factor in produc- 

1 For further discussion of this point, see the writer’s Economics , Chap. n. 


260 


LABOR PROBLEMS 


tive enterprises. After subtracting from the gross operating income 
of the plant the operating expenses, plus depreciation, the re¬ 
mainder, the net operating income, may be divided into wages, 
rent, interest, and profits. The labor organization came into being 
primarily to increase as much as practicable the fraction of the 
total going to the workers in the form of wages. In recent years, 
the spokesmen of labor recognize that the share going to the 
workers may also be enlarged by increasing the total productivity 
of a plant. Wage workers are convinced that wages are not defi¬ 
nitely fixed in an automatic fashion; they believe that associated 
effort will help increase the actual share which goes to labor as a 
factor in production. 

The manufacturer and other producers sell the products of their 
enterprises. Out of the gross income from sales, wages and other 
expenses are paid. In early local markets, in the absence of outside 
competition, the manufacturer-merchant was able to pass wage 
increases on to the consumer. As the business and the area of the 
market increased, distant producers became competitors, and this 
simple, pre-industrial Revolution solution of the wage problem be¬ 
came of no avail. Prices could not be raised in an arbitrary fashion 
because of the inroads of competitors. With the development of 
large-scale business and monopoly it is again possible, in certain 
industries, to raise wages and pass all or an appreciable fraction to 
the consumer in the form of higher prices — until the menace of 
potential competition, of substitution, or of governmental inter¬ 
ference is encountered. In those industries in which competition 
is active or in which the process of raising prices has about reached 
its limit, the opportunity of pushing wages to a higher level depends 
upon attacking the extraordinary profits, if any, of the enterpriser, 
or upon increasing the efficiency of the working force. Labor’s 
hope of increasing wages ultimately lies in cooperation with en¬ 
lightened management for the purpose of improving productive 
efficiency. 

The wages in which the worker is most interested are the yearly 
real wages. Expenses go on unceasingly throughout the year. A 
high hourly or piece rate with many layoffs may mean an inade¬ 
quate wage for the year. Real wages in the accepted technical 
sense mean the sum total of the necessities, comforts, and luxuries 
which may be purchased with the money received as wages. 


METHODS OF COMPENSATION 


261 


This definition is too narrow. In a broader sense, real wages 
include not only the goods and services secured with the money 
wages, but also the services rendered by the community to the 
individual and his family. Governmental ownership of quasi¬ 
public business and the taxation of monopoly profits and differen¬ 
tial rents may reduce the costs of certain services and increase the 
sum total of the services rendered by the community to its mem¬ 
bers. 1 


METHODS OF WAGE PAYMENT 

Wage workers and their employers will usually agree that a fair 
wage should be paid for a fair day’s work performed in a reasonably 
safe, sanitary, and attractive environment. Differences arise when 
an attempt is made to translate fair and reasonable into actual 
practices. The difficulties surrounding the determination of a fair 
wage have been briefly discussed. The determination of a fair 
day’s work is an appropriate subject of research. Standards of 
performance may be established. The “par” performance of each 
task may be ascertained with a reasonable degree of accuracy. 
However, in formulating these standards of performance, two sig¬ 
nificant matters should not be overlooked: 1. Labor power cannot 
be measured with precision and accuracy. 2. The worker cannot 
be expected to produce the same output under different environ¬ 
mental conditions, such as climate, ventilation, and lighting. His 
output will also vary with his physical and mental condition. 
Greater precision may be anticipated in the determination of 
reasonably safe and healthful working conditions. 

Wage workers and their employers are interested in the content 
of the pay envelope. The employer wishes to obtain low labor costs 
per unit of output in his own establishment. He is not especially 
interested in lowering the general rate of wages per hour or per 
piece. In fact, an increasing number of employers are of the opin¬ 
ion that high wages improve the demand for the output of their 
plants. From the point of view of the employer, a system of wage 
payment is desirable if it reduces the labor costs per unit of 
output without impairing the quality of the product or increasing 

1 Carlton, F. T., “The Influence of the Tariff and Monopoly upon the 
Increasing Cost of Living.” Proceedings of the Michigan Academy of Science , 
1910. 


262 


LABOR PROBLEMS 


the waste of material equipment. A plan is sought which will 
furnish an effective stimulus to energetic and interested productive 
activity. 1 The employer considers himself the purchaser of a 
peculiar commodity, labor power. He bargains for it; but gets 
along with labor power much waste and unusable material in the 
form of human peculiarities, prejudices, weaknesses, and antipa¬ 
thies. The employee is opposed to any system of wage payment 
which tends to reduce wages whether measured in time or in 
output of energy. He is afraid of plans which result in excessive 
driving and in the rapid deterioration of the worker. To the 
average worker, work is a means to an end. He does not work for 
the sake of working. The wage bargain brings into the fore¬ 
ground certain distinct differences of interest between employer 
and employee, or between the buyer and the seller of labor power. 
In analyzing different systems of wage payments, these somewhat 
antagonistic points of view should not be overlooked. 

In the following pages, several systems of wage payment will be 
briefly described and evaluated. Profit sharing is not strictly a 
method of wage payment. Nevertheless, it seems convenient to 
discuss its advantages and disadvantages in connection with those 
of the more well-known plans for paying wages. One difficulty 
common to all wage systems is the determination of the amount of 
output which ought to be accredited to organization and man¬ 
agerial ability. Economic interest and experience lead the average 
employee to minimize the importance of business organization, and 
the employer to over-emphasize it. 

The traditional methods of paying workers are the time and the 
piece-wage systems. In recent years numerous incentive wage 
plans have been advocated. Practically all of these newer plans 
are combinations of the old time and piece-wage plans utilized along 
with some form of scientific management. Although incentive wage 
plans have attracted much attention, the use of such methods is 
less than the amount of literature on the subject might indicate. 
Good management is doubtless more significant than wage plans. 
Under similar conditions as to management, actual differences due 
to wage methods are not considerable. 

The chief methods of wage payment are as follows: 

1. Time Wage. In this old and familiar plan of paying wages, 

1 Non-financial incentives are considered elsewhere. 


METHODS OF COMPENSATION 


263 

the base is the unit of time — one hour, one day, or one week. 
Under this plan, as it has usually been carried out, the incentives to 
quicken the pace of the worker and to increase his output have 
been, in the main, the fear of discharge, the prodding of the foreman, 
hope of advancement, or a feeling of obligation to do a fair day’s 
work. The customary method of paying all in a group doing similar 
work the same wage per hour and of failing to keep comparative 
records of the quantity and quality of output, has in many cases 
proved unsatisfactory. Under such conditions, the time-wage plan 
does not afford adequate incentives for the rank and file of workers 
in modern large-scale industry. 

If, however, the same amount of study and experimentation were 
devoted to the development of an adequate time-wage system as 
has been used in organizing more complex incentive or premium 
plans, it seems probable that the merits of the time wage might 
be seen in a more favorable light. “With working conditions 
standardized, maintenance provided for, a plan of production con¬ 
trol inaugurated, the best method and standard time of doing each 
task a matter of record, and the workers trained in these procedures, 
the time method of payment takes on a new aspect.” 1 If each man 
paid by the hour knows exactly what is expected of him, if both the 
worker and the management can readily ascertain the relative 
production in quality and quantity of different workers, an excellent 
and adequate basis is provided for wage increases and for promo¬ 
tions. Under such favorable conditions, the time-wage system 
which is a model of simplicity may prove to be preferable to more 
complex incentive plans. The time-wage system plus scientific 
management is worthy of careful consideration. 

2. Piece Wage. Under this system workers are paid a certain 
rate per unit of output. The desire to increase income is the direct 
and potent incentive for increasing output. As a rule, the piece 
rate has been fixed without careful study of the amount of work 
which might be expected in a day; and, consequently, the employer 
has often been tempted to cut the rate allowed. Workers have 
learned by sad experience with cuts in the piece rate to temper 
their enthusiasm for a large output and a high wage. Rapid work¬ 
ers are discouraged by their shopmates. The piece-wage system 
sacrifices quality for quantity. Careful inspection replaces the 
1 Anderson, A. G., Industrial Engineering and Management , p. 402. 


264 


LABOR PROBLEMS 


prodding of the foreman. The piece wage can readily be used when 
the output is standardized, when inspection and counting are not 
difficult, and when each worker’s output can easily be kept apart 
from that of another. 

The piece-work plan is almost as simple and easily managed as 
the time wage. The bookkeeping is somewhat more difficult than 
when the time wage is used; but it is much simpler than that re¬ 
quired in practically all premium plans. If a fair day’s output be 
determined as carefully as in case of a premium plan, and if a basic 
day wage is guaranteed as in premium plans, the piece-wage system 
would be as unobjectionable as any of the much-lauded premium 
plans — and the former possesses the excellent merit of greater 
simplicity. 

3. Differential Piece Wage. In the piece-wage plan only one 
rate per piece is used; in the differential piece-wage plan several 
rates may be used. A fast worker who produces more than the 
normal number of pieces will be allowed a higher rate per piece. 
On the contrary, the worker who falls below the normal will receive 
a reduction in the rate paid. The rapid worker will gain by re¬ 
ceiving a higher rate per piece as well as by turning out a large 
number of pieces. In a plant in which overhead costs are con¬ 
siderable, this plan has merit from the employer’s point of view. 
The overhead costs are spread over a larger number of pieces when 
workers speed up, and it is economical to pay a differential piece 
rate in order to induce greater rapidity. The plan appears harsh 
to the worker. It does not seem fair to penalize him twice for doing 
less than the standard amount of work. Again, the double incen¬ 
tive for rapidity may lead to over-exertion. 

4. Premium or Bonus Plans. Many premium or bonus plans 
have been formulated. Such plans combine features of the time 
and the piece-wage systems. An adequate premium plan involves 
(< a ) a careful study of the job in order to ascertain with a high degree 
of accuracy the amount of output which a normal worker should 
produce in a given period of time. ( b ) A basic or day wage is 
guaranteed the worker and a premium or bonus is paid for outputs 
in excess of the basic output expected for a day’s work. ( c ) The 
employer definitely agrees not to cut the premium or bonus unless 
some significant change in methods is adopted. The various pre¬ 
mium or bonus plans are subject to such disadvantages as may be 


METHODS OF COMPENSATION 


265 

alleged against the piece-work plan; and they are more complex 
than piece work. Indeed, a straight piece-work plan with a care¬ 
fully determined rate and with a basic day wage guaranteed, 
seems to possess all the good qualities of the more elaborate premium 
plans based on extra payment for increased output. The premium 
or bonus plan attributed to Gantt, a co-worker with Taylor, is 
significant because the bonus is paid for attaining, instead of ex¬ 
ceeding, a scientifically determined task. If the task is properly 
set, only unusually good workmen can go much beyond it except 
at the expense of quality of output, tools, or the stamina of the 
worker. According to the theory underlying this plan, it is un¬ 
desirable to have work done in less than the properly ascertained 
task-time. 

5. The Group Bonus. When a group of workers are cooperating 
in producing a given product it is feasible to use a group or collective 
bonus instead of an individual one. The fundamental features are 
practically the same as in case of the individual bonus. A basic 
day wage is guaranteed each member of the group; and each is 
given, if earned, a share in the collective bonus. Careful study of 
the practicable performance of the group is essential for satisfactory 
utilization of the plan. The bonus allowed may be divided equally 
among the members of the group or in proportion to the basic day 
wage guaranteed each member. Several firms have used the group 
bonus plan with satisfactory results. The plan works best in case 
of groups of moderate size. Experience indicates that it tends to 
encourage individual initiative; speedy members of the group are 
not likely to be criticized by their fellow-workers since all gain as 
the result of increased group output. Each man in the group 
becomes “the self-appointed overseer of his fellows.” The group 
bonus stresses teamwork rather than individual self-interest. 

Leitch’s “ collective economy dividend ” is an interesting variation 
of the group bonus plan. It is designed to be used in connection 
with his scheme of “industrial democracy.” The cost of production 
per unit before the introduction of the Leitch plan is compared with 
costs after installation. If a saving is made, a 50-50 division is 
made between labor and capital. The economy dividend is to be 
paid at frequent intervals in the form of a percentage added to the 
worker’s wage. The bonus is based on the relative savings in costs 
of production. If wages and other costs rise, such increases are 


266 


LABOR PROBLEMS 


taken into account. If the increase in the total expense of produc¬ 
tion is less, a saving has been made. This is a group matter; 
management and men are given an economic incentive to cooperate 
for betterment within the plant. 

6. Quality Bonus. The older forms of the premium or bonus 
plans emphasized quantity rather than quality. Quality depends 
to a large extent upon the worker himself; quality appeals to 
craftsmanship. A quality bonus might well include payment for 
the saving of waste and for adequate care of machinery. “It seems 
quite probable that the best plan in the future will be to give a 
reward for both quantity and quality, but to make the quantity 
element less prominent in determining the rate. It has been found 
that where quality is emphasized, quantity automatically in¬ 
creases.” 1 On the other hand, certain well-known companies hold 
that a quality bonus is unnecessary with them because of a well- 
organized system of inspection. 

7. Regularity and Punctuality Bonus. As industry has de¬ 
veloped from small-scale and individualized production methods 
to large-scale and standardized methods involving teamwork as an 
essential feature, the importance of regularity and punctuality on 
the part of each worker becomes increasingly evident. Irregularity 
is costly; it disorganizes the working force. The absence of one 
man may slow up or stop a long chain of workers. A bonus is paid 
by certain employers to workers who do not lay-off unnecessarily 
and who are punctual for a given period. The period covered 
should not be long — one or two weeks. 

8. Length-of-Service Bonus. That labor turnover is expensive 
is now generally recognized. A bonus for length of service may be a 
factor in reducing this expense. In one plant it was pointed out 
that a considerable group of employees had been with the company 
for several years. Each one of these employees earned a bonus 
“as soon as he came into the plant in the morning.” 

Some companies use a combination of two or more plans. For 
some years a firm manufacturing men’s garments used four — a 
quantity bonus, a quality bonus, a regularity and punctuality 
bonus, and a length-of-service bonus. On the other hand, a noted 
industrial manager insists that the payment of a premium or bonus 
is a bribe or bait. He would use a time-wage plan together with 
1 Simons, A. M., Personnel Relations in Industry , p. 211. 


METHODS OF COMPENSATION 


267 

non-monetary incentives. The importance of motives other than 
pecuniary is often overlooked; but it is not difficult, on the other 
hand, to over-emphasize them. It should not be forgotten that 
money — income — enables men and women to satisfy a number of 
desires — for a living or for a living plus, for self-esteem, acquisi¬ 
tion, prestige, etc. Opportunity for the exercise of the creative 
impulse may rest upon the foundation of a sufficiency of income. 
That which appeals to several important impulses is likely to be 
more important than such as appeal to one only; hence, much 
weight should be given to the power of a money wage as a source 
of incentive to efficiency and workmanship. 

ESSENTIALS OF A WAGE-PAYMENT PLAN 

What are the essentials in developing a feasible wage-payment 
plan? A satisfactory method will result in lowering costs, in in¬ 
creasing wages, in increasing output, and in developing a spirit of 
teamwork and of goodwill in the plant. In proposing the adoption 
of a new plan certain definite points should be given careful con¬ 
sideration. 1. Neither a bonus or incentive wage system nor profit 
sharing will accomplish much in furnishing an incentive to do more 
and better work unless the wage earner can be assured a reason¬ 
able degree of regularity of work. Any incentive plan will be 
doomed to failure if the worker fears that he is likely to work him¬ 
self out of a job. 2. The workers should have an opportunity to 
confer with the management before the installation of any plan or 
before any marked change is made in an existing plan. Publicity 
in regard to wage plans before adoption and of production records 
after adoption is essential. 3. The plan should be introduced and 
rates fixed after a careful study of the amount of output which 
constitutes a fair day’s work, of rates of wages elsewhere, of profits 
and of incentives. 4. A complex system tends to weaken incentives 
and to make for misunderstandings. The method of calculation 
should be simple and easily understood. Simplicity is a prime 
consideration. 5. The time of payment should not be long de¬ 
layed. 6. The reward should bear a direct and visible relation to 
effort. 

If the need for simplicity and ease of comprehension be over¬ 
looked, it may be agreed that an adequate and scientific wage- 


268 


LABOR PROBLEMS 


payment plan might reasonably include a reward (a) for quantity 
(speed), (b) for quality, (c) for regularity and punctuality, (d) for 
length of service, and ( e ) for mobility. (/) Payment should par¬ 
tially be a group and partially an individual matter, (g) The plan 
should also provide a method penalizing waste of materials, ma¬ 
chines, and time. But it is clear that a plan including all of these 
elements would be complex and difficult of comprehension. A 
feasible and satisfactory plan must of necessity sacrifice compre¬ 
hensiveness for simplicity. And, again, let it be noted, good 
management is of greater importance than the actual form of wage 
payment. 

THE DETERMINATION OF BASIC AND OF RELATIVE 
WAGE RATES 

In attempting to place the payment of wages upon such a basis 
that militancy may be reduced to a minimum and that agreements 
between employers and employees may become the customary 
methods of procedure, it is necessary to study the problem of wage 
payments as a scientific proposition. The problem may con¬ 
veniently be divided into two separate elements: i. How shall the 
basic wage rate for a particular type of work be determined? 
2. How shall relative wage rates for different workers doing the 
same kind of work be determined ? 

The wage rate actually paid is determined by the supply and de¬ 
mand for workers modified by the bargaining strength of employers 
and employees or groups of employees. Recognizing that funda¬ 
mentally the wage rate is a matter of bargaining, our problem is 
in no small measure a matter of bargaining in the open, of publicity 
for the facts in regard to the business. Collective bargaining can 
only achieve a reasonable degree of success and permanency when 
carefully kept records of the industry and a statement of expendi¬ 
tures, of allowances for depreciation, and of profits are placed at the 
disposal of the representatives of the workers. With the facts be¬ 
fore them, it is not difficult to prove to the workers that excessive 
wage demands will ruin the business and dry up the sources from 
which wages flow. But until such steps are taken collective 
bargaining will be in the main a blind struggle between opposing 
interests, resulting usually in compromises satisfactory to neither 
side and prolific of opportunities for friction. 


METHODS OF COMPENSATION 


269 

In order that bargaining may proceed in an orderly and rational 
fashion further analysis is desirable. Fairly accurate answers to the 
following questions will assist men and management in reaching 
reasonable conclusions in regard to basic wage rates. 

1. What is the grade of skill involved in the operation or process? 

2. How much training or experience is required before the be¬ 
ginner becomes a skilled worker? 

3. What are the conditions under which the workers are em¬ 
ployed — heating, ventilating, lighting, speed, eye strain, danger of 
accident and of industrial disease, cleanliness, etc.? 

4. What responsibilities are placed upon the workers? To what 
extent does the management aid the workers in planning work, in 
providing tools and keeping them in good condition, and in facili¬ 
tating the work in other ways? 

5. What are the opportunities for promotion and for increase in 
wages? 

6. Is the work characterized by regularity of operation and 
reasonable assurances of continued employment? 

7. Is the industry as a whole characterized by stability or in¬ 
stability? Is the output a staple product? 

Adequate explanations for variations in the amount of wages 
received between different individuals performing similar tasks 
will chiefly depend upon the following points: — 

1. What is the output of the worker as compared with the 
normal? 

2. What is the quality of his output? 

3. What wastes are avoided by the worker in question? 

4. What are his personal qualities and general value as a worker? 
For example, does he display initiative and ability to assume re¬ 
sponsibility? Can he perform efficiently more than one type of 
work? Is he able to work harmoniously with his fellow workers? 1 

In conclusion, it may be pointed out that any careful considera¬ 
tion of wage payments and incentives will lead directly to (a) job 
analysis; ( b ) rating of individual employees either by foremen or by 
foremen and a committee of fellow-workers; and (c) plans for 
regular and continuous work, supplemented by unemployment 
insurance features. If industrial peace and teamwork in industry 

1 Hoopingarner, D. L., Labor Relations in Industry , pp. 233 fit.; Sanders, 
Harvard Business Review , Oct., 1926. 


270 


LABOR PROBLEMS 


are to be attained and retained, it may be stated with a considerable 
degree of assurance that wage determination either of basic wage 
rates or of piece, premium, or quality rates should be made the 
subject of joint consideration by employers and representatives of 
employees. 


PROFIT SHARING 

Profit sharing is a proposal for improving industrial relations; 
but it is closely related to methods of remunerating labor. Profit 
sharing is a form of group bonus, proposed by the management, 
supplementing the ordinary methods of wage payment; it is not a 
substitute for wages. Under profit sharing, the worker may be paid 
time or piece wages, or some form of the premium or bonus system 
may be used. If profits are made, in addition to the amount re¬ 
ceived regularly in the pay envelope, the employees are promised 
some more or less definite share in the profits of the business. 
Profit sharing differs markedly from the premium paid for increased 
output under a financial incentive wage plan. In case of the latter, 
the bonus or premium received is due in a large measure to the ex¬ 
tra exertion or dexterity of the individual workman. Under profit 
sharing, the dividend or share of the profits paid to the employee 
depends upon a multitude of circumstances, such as the business 
ability of the management, conditions of the market, the efficiency 
and morale of the entire working staff, and the attitude of each 
individual worker. The diligence and effort of a particular worker 
are only minor factors in producing business profits, and may be 
more than counterbalanced by the inefficient functioning of other 
parts of a complex and inter-related industrial and business mech¬ 
anism. 

Profit sharing has been classified into three forms: cash payments 
may be distributed at the end of a definite period according to some 
plan; payment may be made in the stock of the company; or de¬ 
ferred payments may be provided in the form of insurance, an an¬ 
nuity, or some other form of savings. The third form has appealed 
to the thrifty Frenchman. If employees buy shares of stock in the 
company which employs them, they do not become profit sharers. 
The dividends received are paid to them as stockholders, not as 
employees of the company sharing in the profits. When shares of 
stock are given instead of a cash bonus, it becomes profit sharing. 


METHODS OF COMPENSATION 


271 


In the United States, the cash bonus is the form usually adopted. 
Earlier plans were often indefinite. The company promised to pay 
a profit-sharing bonus at the end of the fiscal year without specify¬ 
ing the amount or the percentage of the profits to be turned over 
to the workers. More recently, the companies adopting profit 
sharing promise to divide the profits at some ratio, say 50-50, 
between stockholders and employees. The profits to be divided 
are ascertained by subtracting from the gross sales of the company 
all expenses, including depreciation, wages, and a fixed percentage 
for dividends upon the stock outstanding. The method of cal¬ 
culating is obviously not simple. Vexatious questions regarding 
depreciation, stock watering, use of surplus, and the like, inevita¬ 
bly arise to becloud the issue. Again, profits cannot be divided as a 
rule more frequently than once or twice a year. It is not easy for 
each worker to see any very direct relation between his efforts and 
the amount of profits which are vouchsafed to him. Many widely 
different plans of profit sharing have been tried; but the history of 
profit sharing in this country and in England does not inspire con¬ 
fidence in its value as an incentive to workers. It does not conform 
to certain tests which are essential to any satisfactory system of 
employee compensation. The method of calculating profits is not 
easily understood. The payment of the share of profit is delayed for 
several months instead of appearing in the next pay envelope as is 
the case in other incentive wage plans. The pecuniary reward does 
not bear a visible and direct relation to effort or carefulness. How¬ 
ever, since unrest and suspicion in the labor world are in no small 
part psychological matters, profit sharing may increase goodwill 
and efficiency. Dividends are ordinarily paid to the workers in 
proportion to the wages received. However, in a few examples of 
profit sharing, workers have shared equally irrespective of earnings. 

The newer and more successful form of profit sharing accepts 
the following fundamental principles. 1. Labor and management 
should receive adequate compensation for their efforts in the form 
of wages and salaries. The market rate of wages, or a higher rate, 
should be paid. 2. Capital should receive a fair interest return. 
3. Labor, management, and capital should share in the profits, 
above expenses, which, it is assumed, arise because of joint efforts. 
Successful profit sharing causes the workers to take an interest in 
good management. Under piece work or a premium plan workers 


272 


LABOR PROBLEMS 


wish sufficiently good management to insure smooth operation of 
the plant. They desire machines kept in repair, raw materials 
provided on time, and the like; but they are little concerned with 
the broader aspects of business policy. 

PRODUCT SHARING 

Product sharing may be considered to be the prototype of profit 
sharing. The latter is an “adaptation of this ancient and ap¬ 
proved product sharing to the conditions of modern industrial 
life.” In agriculture, the metayer system or share farming is a form 
of product sharing. The owner of the farm furnishes the land, the 
buildings, and, oftentimes, a portion of the implements, live-stock, 
and seeds. The product is shared between the owner and the ten¬ 
ant in accordance with a contract made at the opening of the season. 
In the fishing industry, the proceeds of a given catch or of a given 
voyage are often divided among the crew. Wages are not paid; 
the recompense depends entirely upon the size of the catch. Prod¬ 
uct sharing does not provide for wages. Profit sharing places in 
the worker’s hands an allowance in addition to the ordinary wage. 

ADVANTAGES OF PROFIT SHARING 

In so far as it has a scientific basis, profit sharing rests on the 
principle that cooperative effort is more productive than unco¬ 
ordinated endeavors. It is an attempt to achieve teamwork in 
industry. Its chief value is in developing that intangible element 
called morale. Piece work and the various premium plans based 
on the quantity of individual output stimulate the worker to 
greater exertion; but they do not cause him to be more careful of 
the machinery and tools which he uses; and these systems of wage 
payment, it is contended, do not aid in eliminating the waste of 
material used in production. It is possible, for example, to cut 
leather for shoes so that much material will be wasted. Indeed, a 
workman who is working against time as a piece worker cannot be 
expected to reduce his speed in order to save material. Under 
profit sharing, a saving in material is as potent in increasing divi¬ 
dends as is a reduction in the time of performing a given operation. 
It is further asserted that the worker who is a profit sharer also has 
a personal interest in caring for tools and machines placed in his 


METHODS OF COMPENSATION 


273 


charge. According to its friends and advocates, profit sharing will 
improve the quality of the product, will induce the workman to be 
more careful of his tools, will reduce the waste of materials used in 
making the finished product, and will, in no small measure, elimi¬ 
nate the friction between employer and employee. As an incentive 
to more earnest and effective endeavor, profit sharing may work 
fairly well in the case of a small group and fail in the case of a large 
one. In the former the direct relation between individual efforts 
and results is much clearer than in a large group. 


OBJECTIONS TO PROFIT SHARING 

(a) As a stimulus to the individual worker to increase his output, 
profit sharing is less direct and potent than a piece wage or some 
form of a premium plan. An increase in the amount contained in 
the next pay envelope is much more stirring and invigorating to the 
average person than the possibility of a dividend declared some time 
next winter. The nexus between individual effort and a larger 
piece or premium wage is also much closer than between individual 
effort and company profits. ( b ) Profit sharing has been a one-sided 
matter. The employer has proposed it and has outlined the pro¬ 
gram to be followed. From the point of view of the workers, 
their share in the profits is considered to be a gift or a bait. In the 
words of a spokesman for organized labor, profit sharing “is cal¬ 
culated to produce docility of spirit and to discourage organization 
among the workers.” 

(c) Profit sharing, instead of reducing the friction between labor 
and management, may increase it because the possible points of 
difference between the two parties are increased rather than di¬ 
minished. The question of how much the workers should receive 
and how much should go to the investing and managerial groups, 
remains practically unchanged under profit sharing. If the system 
should become universal would not the struggle as to the rate of 
wages continue, and in addition would not disputes arise as to the 
division of profits? As the books of the company are not usually 
open to inspection, the suspicion may arise that the company is 
not dealing fairly with its profit-sharing employees. The wage 
system gives the worker a definite contractual income per day or 
per piece. Profit sharing makes a portion of his income directly 


274 


LABOR PROBLEMS 


dependent upon the vicissitudes of the business world. Profit 
sharing “ offends against that cardinal principle which demands 
‘ that every man shall receive his own reward according to his own 
labor.’” The reduction in costs resulting from greater care, dili¬ 
gence, and speed, and leading toward increased profits to be 
shared between labor and capital, may be counterbalanced by bad 
management so that no profits may accrue to be distributed. 

Systems of profit sharing have usually been inaugurated by em¬ 
ployers for one or more of three reasons: (i) In order to increase 
the output of the factory, to induce the workers to be more careful 
of tools and machinery, and to reduce waste of materials. (2) To 
appease the workers and to alienate them from their union or to 
prevent the formation of a union among employees. (3) For 
humanitarian or philanthropic (not business) reasons. 

The first motive needs no further discussion. Effective trade- 
union action is only possible when the members of the union feel 
that their interests are furthered through the use of union methods 
and weapons. If the employees of a company become owners of 
shares of stock, or have the prospect of receiving an annuity or an 
annual bonus, they are not as likely to use union methods in order 
to secure higher wages, a shorter work period, or better work¬ 
ing conditions. A strike might endanger their profits. A wage 
earner who is also a profit sharer is likely to be less loyal to his 
union and less favorable toward the adoption of coercive measures 
against the employing firm than the man who is simply a wage 
earner. The solidarity of the labor organization is a phenomenon 
which would not be clearly manifested in a mixed union of employ¬ 
ers, employees, and semi-employers. As long as labor organizations 
are formed primarily to fight antagonistic employers, profit sharing 
tends to become a disintegrating force; it dilutes orthodox militant 
unionism. No inconsiderable percentage of profit-sharing systems 
have been inaugurated after a strike or after a period of agitation. 
Many employers recognize the possibility of using this gentle but 
potent means to secure industrial peace; and labor leaders are not 
blind to this situation. If labor organizations are recognized and 
bargained with, it seems possible to combine unionism and profit 
sharing without unfavorable effects upon the former. 

A generation or more ago, men like S. M. Jones and N. O. Nelson 
installed profit-sharing schemes in which humanitarian ideals un- 


METHODS OF COMPENSATION 


275 

doubtedly took precedence over purely business motives. Both 
men were engaged in highly profitable businesses, were well-to-do, 
and were actuated by high and non-mercenary ideals. Profit 
sharing worked well in such hands; but their experience is of little 
value as a guide in studying the system. These men were primarily 
philanthropists. Their scheme of profit sharing points toward 
some paternalistic utopia, not toward industrial democracy. 

Profit sharing is not important as a solution of the problems con¬ 
nected with industrial relations. The familiar wage system is 
retained and a special form of bonus is added. It is only a palliative 
or, according to spokesmen of organized labor, a sedative. Only as 
profit sharing approaches producers’ cooperation in form and 
method can it be considered of outstanding industrial significance. 
Only comparatively few establishments have made successful use 
of profit sharing. The deferred payment scheme is not inviting 
to Americans because of the extreme mobility of the labor force 
and because the American workman is impatient of slow gains, is 
improvident, and is fearful that in some way he may be finally 
cheated out of the promised annuity. The cash bonus scheme has 
the best prospect of success in this country, although the stock¬ 
sharing plan may succeed in a measure among the more highly-paid 
operatives. 


WELFARE WORK 

From one point of view welfare work or service work may be 
classified as an attenuated form of profit sharing. It has been 
defined as including “all of those services which an employer may 
render to his work people over and above the payment of wages.” 
Welfare work usually has for its basis the improvement of working 
conditions within the factory or shop, the betterment of the home 
environment of the workers, provisions for educational facilities or 
for wholesome and healthful recreation. “Model” homes may be 
built for the working people and rented to them at low rentals, an 
attractive dining room which furnishes meals at cost may be pro¬ 
vided, night schools for employees and kindergartens for their 
children may be established, baths and amusement parks may be 
provided, or the sanitary conditions within the factory may be 
improved — these are varieties of welfare work. The increasing 
attention which has been paid in recent years to industrial better- 


27 6 


LABOR PROBLEMS 


ment is indicative of a tendency to accept the idea that it is not 
only humane, but businesslike, to strive to conserve the health and 
efficiency of the workers in a plant. In establishments having a 
personnel department, the welfare or service work has become an 
integral part of personnel administration. Welfare work has not 
always been appreciated by employees. Too frequently in the 
past it has been characterized by paternalism. According to Pro¬ 
fessor Commons, “ welfare work is not the solution of the labor 
question nor the substitute for labor organization. It is part of the 
labor movement for better treatment, better conditions, and greater 
opportunities.” Robert Owen, the great British industrialist and 
humanitarian, introduced welfare work into his cotton mill at New 
Lanark near Glasgow soon after he came into control of the plant 
in 1800. Welfare work originated as a form of humanitarianism or 
paternalistic philanthropy; it is evolving into a method, based upon 
business and scientific principles, of improving the efficiency of the 
working force of an establishment. 

REFERENCES 

Anderson, A. G., Industrial Engineering and Management, Chaps. 23-25 
Balderson, C. C., Group Incentives 

Carlton, F. T., Popular Science Monthly, Vol. 77, pp. 56-60 
Diemer, H., Wage Payment Plans That Reduced Production Costs 
Emmett, B., “Profit Sharing in the United States,” Bulletin of the 
Bureau of Labor Statistics, No. 208 
Hamilton, W. H., and May, S., The Control of Wages 
Lansburgh, R. H., Industrial Management, Parts 5 and 6 
Patterson, S. H., Social Aspects of Industry, Chaps. 6 and 18 
Watkins, G. S., Labor Management, Chaps. 16 and 17 


CHAPTER XVI 


HUMAN ENGINEERING 

THE HUMAN EQUATION 

No matter how far we may go in the mechanization of industry, 
at various points from the design of the machine to the sale of its 
products human beings will continue to play important, although 
changing, roles. In an interdependent and complex world, indeed, 
the human equation is of increasing importance. Nearly all enter¬ 
prises are now group projects. Professor John Dewey speaks of 
“the increasing corporateness of society.” Management is con¬ 
stantly dealing with “the human equation.” The personnel prob¬ 
lems of the primitive and the pioneer worlds were relatively simple. 
Today human behavior is of outstanding import. 

Personnel management is not something to be set down as a 
definite and fixed plan of action. The human equation is one of 
many variables. It cannot be solved mathematically. Human 
beings do not move in well-defined orbits; they seem to be ir¬ 
rational, unsystematic, cantankerous. Men are strange creatures 
and are not easy to manage. Human beings are not single-track 
individuals; they are motivated by a multitude of desires and 
longings. No two individuals are exactly alike in instinctive in¬ 
heritance or experience; but there are many similarities in reactions 
to new experiences and in attitudes toward certain forms of treat¬ 
ment by fellowmen and employers. 

Industrial psychology endeavors to study the behavior and re¬ 
actions of men and women at work. By utilizing such principles 
of individual and group behavior as industrial psychology indicates, 
the personnel manager or the organization engineer endeavors 
properly to direct the energies of groups of men, to apply human 
effort effectively in industrial enterprises. As yet the technology 
of the direction of man-power is about where mechanical engineer¬ 
ing was fifty or seventy years ago. It lacks precision and standards; 

277 


LABOR PROBLEMS 


278 

but management can no longer afford to neglect the teachings of 
industrial psychology. 

Modern civilization is characterized by the growth of group 
activities. Industry has by no means escaped this tendency. 
Management deals with groups of workers. The effectiveness of a 
group properly directed and motivated is far greater than the 
effectiveness of the individual members added together. The 
whole is indeed greater than the sum of its constituent parts. A 
large group of men may be a mob — a destructive force — or it 
may be under proper direction an effective and constructive work¬ 
force. 

The highest efficiency in industry can only be obtained under 
good leadership, with careful selection of the working force, and 
with adequate materials, machines, and surroundings. Under such 
conditions a high morale, or enthusiasm for the work of the or¬ 
ganization, may easily be developed. This is the prime job of the 
personnel manager. He is a “harnesser of group behavior to pro¬ 
ductive purposes.” 

The development of cost accounting and the accumulation of 
reasonably accurate information in the fields of sales and produc¬ 
tion are enabling business men and industrial experts to see clearly 
the sources of loss and waste in the business world. The engineer’s 
plans for the routing of materials and partially finished articles and 
for coordinating departments have also made evident the high cost 
of indifference and illwill — the lack of enthusiastic and willing 
teamwork — among the employees of an industrial establishment. 
Many are beginning to understand that mechanical perfection is of 
little import without the development of interest and efficiency on 
the part of workers. Statistics of overhead expenses and of the 
cost of labor turnover are causing manufacturers to seek diligently 
for methods of regularizing production. With regularity of opera¬ 
tion comes an appreciation of the need of personnel methods for 
the organization of a stable labor force with excellent morale. 
Irregularity of operation has been coupled with a drifting labor 
force, little teamwork, the hard-boiled labor-driver type of foreman, 
industrial unrest, and inefficiency. 

If a serious difficulty arises with steam boilers, blast furnaces, 
engines, machines, or chemicals, an expert is called in to study the 
matter carefully. Only recently have progressive employers real- 


HUMAN ENGINEERING 


279 


ized that good management consists chiefly in an application of the 
science and art of handling men. Slackerism, insubordination, 
restriction of output, and lack of interest cannot be cured by calling 
labor bad names or by fierce denunciations of labor organizations; 
these social and industrial phenomena should likewise be made the 
subject of study. Muddling through in human relations in an 
industrial plant may be picturesque and thrilling, but it is expen¬ 
sive. There is a high cost of low thinking or of guesswork in the 
realm of personnel relations. 

THE WORK OF THE PERSONNEL DEPARTMENT 

The personnel or industrial relations department of a factory or 
of a store deals with the relations between men and management. 
It attempts to make a scientific approach to the study of industrial 
relations. The personnel manager essays in an orderly fashion to 
solve the human equation as it is presented in a specific industry. 
The big problems of industry in the fourth decade of the present 
century are not technical; the human problems of industry are 
taking first rank in importance. Successful operation of industry 
demands teamwork between management and men. The up-to- 
date industrial plant utilizes many sciences and arts. In it are 
found an intricate organization of machinery, the utilization of 
natural resources and power, and the application of human re¬ 
sources and power. The development of leadership and of morale 
is important. In periods of prosperity employers are depending 
more and more upon friendly relations with employees instead of 
disciplinary methods. 

The work of the personnel department in a plant is in a large 
degree advisory. All executives should be personnel directors. 
The directors of the American Management Association have pre¬ 
sented this view very clearly. “Personnel work is an integral 
and inseparable part of management, interwoven into all of the 
efforts and activities of the production and sales departments and 
of the office.” The problem of the management in regard to human 
relations in industry is to reduce friction between management and 
men, and to develop such working conditions as will increase the 
quantity and improve the quality of output. Among the prob¬ 
lems which may be specifically assigned to the industrial relations 
or personnel department are: 


280 


LABOR PROBLEMS 


Hire and develop the right man for the right job. 

Discover the best methods of work and of supervision. 

Improve skill. 

Establish good working relations between management and men. 
Develop self-respect, interest in work, initiative, responsibility, 
and morale. 

Promote health and safety. 

Decrease fatigue and boredom. 

Remove anxieties, irritations, suspicion, and discontent. 1 

The industrial relations department should be coordinate in pres¬ 
tige and authority with other departments such as the production 
and the sales. In some matters it may have direct control, in others 
its functions will be advisory. This department should be ap¬ 
pealed to in connection with all the human problems of the plant. 
The personnel director can only hope to be successful after he has 
been able to obtain the cooperation of other departments. A fully 
developed department of industrial relations will have the following 
divisions: 


Employment 
Training or Education 
Joint Representation 


Health and Safety 
Welfare or Service 
Research 


The primary job of personnel administration is the effective 
utilization of human resources. It should aim to cultivate an 
attitude of mind on the part of executives and workers which will 
allow the problems of industrial relations to be approached in a 
spirit of mutual forbearance, sympathy, sweet reasonableness, and 
willingness to analyze the situation. It is the function of the 
personnel department to remove the militancy of the traditional 
relations between management and men. Up-to-date personnel 
work in industry gives some indication of being a plant cultivated 
only in prosperous times; in periods of depression many executives 
under the pressure of business exigencies and of tradition are prone 
to scrap industrial relations departments and to “put the screws on 
labor.” However, an investigation of industrial relations practice 
in the Middle West in 1931 and 1932 indicates that personnel work 
is being continued during the depression. In certain cases, the 
functions of the industrial relations department are being increased. 

1 Service Bulletin, Personnel Research Federation, Jan., 1930. 


HUMAN ENGINEERING 


281 


Relief plans for laid-off employees have been adopted, and the work 
of carrying out the program has been placed in the hands of the 
industrial relations department. 1 


METHODS OF HIRING 

The old method of hiring workers was merely a guessing contest. 
The foreman needing additional employees went to the shop door 
in the morning and selected the number wanted from the line-up 
of persons looking for jobs. This informal method took the time of 
a foreman who had many other duties and responsibilities, and it 
resulted in many misfits. Certain foremen considered themselves 
to be excellent judges of that complex intangible, human nature. 
They usually followed “hunches” or used certain characteristics 
as the basis of judgment in selecting employees, such as the type of 
face, color of hair or eyes, handwriting, etc. Few purchasing agents 
resort to similar empirical methods in selecting steel, rubber, live¬ 
stock, or other commodities. The foreman should not be expected 
to hire men; he does not buy the raw material required, select the 
machines to be used, determine the location of machines, or the 
type of power to be employed in the department under his super¬ 
vision. The typical foreman is not qualified, and he does not have 
the means or an adequate amount of time at his disposal, for in¬ 
telligent selection of man-power. The foreman should be con¬ 
sulted before selection is made; but the sole responsibility for hiring 
should not rest on his shoulders. 

The up-to-date factory has developed an employment division 
which is, in reality, a specialized purchasing department for the 
buying of man-power, for the purpose of bargaining for a peculiar 
and complex agent in production. The task of selecting workers 
for an industrial plant, a store, or other form of business organiza¬ 
tion is of great importance. The applicant for work may also be 
considered as a salesman with a special kind of service to sell. 
Since he must go with his labor-power, the applicant will desire 
information about the personnel policy of the company, the chances 
for promotion and for increase in wages, working conditions, in¬ 
surance schemes, safety, regulations in regard to regularity and 
punctuality, and, perhaps, something about the worthwhileness of 


1 Walters, J. E., Personnel Aug., 1932. 


282 


LABOR PROBLEMS 


the work he is expected to perform. The specific functions of the 
employment division of the personnel department are about as 
follows: 


To interview and hire workers 

To introduce the new employee to his job 

To superintend transfers and discharges 

To assist in fixing rates of pay 

To study causes of labor turnover and absenteeism 

To conduct exit interviews 

The first contact which the prospective employee has with the 
plant is that provided by the employment division. Its offices and 
waiting rooms should be attractive. Applicants for work should 
be treated courteously. If not employed, it is not disadvantageous 
for the company if the rejected seekers for work feel that they have 
been well treated and that this shop must be a good place in which 
to work. The first impressions about the plant are important. 
Interviews should be conducted with a considerable degree of 
privacy. It is no longer considered to be- good salesmanship to 
over-emphasize the good qualities of a product offered for sale, or 
to induce a customer to buy something he manifestly ought not to 
purchase. Likewise, an employment manager in the preliminary 
interview should not overstate the desirable features of a job, or 
overlook the disagreeable ones. Satisfied employees who are fitted 
for their work should be the aim of the division. The worker’s 
point of view should not be neglected by the personnel department. 
The function of the interviewer has been very briefly summarized: 
to give and to get information, and to make a friend. The success¬ 
ful interviewer takes an interest in the men with whom he comes 
in contact; he ought not to be a person of moods, he should have 
an intimate knowledge of the work of the plant and of the local 
employment situation. Trick questions and snap judgments should 
be avoided. The importance of first impressions was so clearly 
understood by the manager of an Eastern plant that the company 
sent out a group of their own men to make applications for jobs in 
other plants. These workers were asked to write a short state¬ 
ment about their impressions. The company adopted this un¬ 
usual procedure in order to obtain inside information as to methods 
of hiring used by the management of other plants; the managers 


HUMAN ENGINEERING 283 

hoped to learn what to do and what not to do in the employment 
division. 

Since the prime function of the employment division is the ac¬ 
curate fitting of man to job, two types of investigation should be 
undertaken: (a) an analysis of the jobs offered in the plant and 
( b ) an analysis of the vocational fitness of the applicants for jobs. 
Job analysis consists in taking a job apart and carefully examining 
its parts. Among the items considered in an adequate job analysis 
are: the technical equipment provided, the operations required, the 
conditions under which the work must be performed, the methods 
of wage payment, training or skill required, relations to other jobs, 
opportunities for promotion, permanency of job, age limits. Job 
analysis may also aid in the improvement of methods of performing 
the job. Valid tests of vocational ability which give accurate 
information as to the type of job for which a particular worker is 
fitted are not easily developed. Psychologists are of the opinion 
that certain general traits can be readily ascertained. For example, 
does the applicant prefer to work with hands or head, does he 
prefer outside or indoor work, is he attracted by tasks requiring 
responsibility or initiative, is he fitted for tasks requiring accuracy, 
is he “persistently interested” in a certain type of work? Trade 
tests which indicate a knowledge of the tools and methods employed 
in certain jobs may be used with a fair degree of success. The 
traditional methods of depending upon first impressions, letters of 
application, photographs, letters of recommendation, are but slight 
improvements upon chance. Tests in which good and experienced 
workers rank high appear to be yardsticks which might reasonably 
be applied to applicants for jobs similar to those held by the 
former. 1 

The employment division has a variety of sources from which to 
draw its necessary supply of manpower. One well-known concern 
reports that eighty to ninety per cent of new employees are referred 
to it by present employees. The typical new employee of this 
company will have one or more friends in the plant. He knows 
something about the organization, and he is favorably disposed to¬ 
ward it. The problems of adjustment are reduced to a minimum. 
Former employees may also constitute a considerable source of 

1 Laird, D. A., Psychology of Selecting Men , Chaps. 5-15; Hollingworth, 
H. L., Vocational Psychology and Character Analysis , Chaps. 4, 5, 7, 8,16,17,18. 


284 


LABOR PROBLEMS 


labor supply in a well-managed plant. A good promotion plan will 
enable the employment division to fill many positions from the 
present force. Other sources are voluntary and unsolicited applica¬ 
tions, advertising, employment agencies, schools, labor organiza¬ 
tions. 


ALTER THE APPLICANT IS HIRED 

An effort should be made to make the new recruit “feel at home” 
as soon as possible. A large fraction of the labor turnover in many 
establishments is found among those who have been employed re¬ 
cently. Some are not qualified for their jobs and others do not get 
acclimated in the new environment. A representative of the em¬ 
ployment manager’s office should introduce the new employee to his 
foreman and to a few of his fellow workers. A short trip around the 
department or other portions of the plant may be time well spent. 
The newcomer should be informed as to the location of the wash¬ 
room and lockers, and all special rules which apply to him should 
be explained. A few days later, one of the group in the employ¬ 
ment manager’s office should make a trip into the department for 
the purpose of discovering whether the man is satisfied and is 
adjusting himself to the new environment. Discharges or transfers 
from one department to another are matters which may well be 
placed within the authority of the employment division. In case a 
man quits, an exit interview with one of the staff in the division 
will frequently yield information about grievances and causes of 
friction. An employment division which performs the functions 
which have been outlined will add to the overhead expenses of the 
organization. Many firms believe the informal, traditional, and 
directly inexpensive plan to be the most economical. The gains 
resulting from the services of a good employment division are 
difficult of measurement. Among the advantages are reduced 
labor turnover, improved morale, and increased goodwill on the 
part of employees as a group toward the management. An ex¬ 
cellent public employment agency might perform in an adequate 
fashion many of the functions of an employment division; but at 
the present very few public agencies are actually prepared to do so. 


HUMAN ENGINEERING 


285 


PROMOTIONS 

To select the right man for promotion is not an easy task. 
Jealousy and discontent are the almost inevitable results of a poor 
or of no definite promotion policy. One large corporation indicates 
to its employees that “no position of responsibility will be filled” 
until a canvass has been made of its present employees. All 
employees desiring promotion are expected to register their ap¬ 
plications for promotion. A large gear works had an excellent 
production manager, its labor turnover was low, and the employ¬ 
ment division always had a waiting fist. The production manager 
resigned. Instead of promoting one of several qualified foremen 
the poorly qualified son of a large stockholder was brought in from 
the outside. Soon thereafter labor turnover became considerable, 
and the waiting list dwindled. 1 The methods of promoting are 
four: (a) by seniority, (b) by merit, (c) by pull, relationship, or 
friendship, and (d) by accident or chance. Advancement by 
seniority has the advantage of giving each worker the opportunity 
to move forward in the ranks if he is faithful. It does not lead 
to keeping workers “on their toes”; and it often subordinates 
merit to faithfulness without special competence. Merit is the 
ideal, providing adequate and valid tests of merit can be applied 
and publicity is given as to methods and ratings. Success in a 
subordinate position does not necessarily indicate that the man 
possesses the qualifications for a new and different job. 2 Promo¬ 
tion has also been used as a check upon union activity and the 
growth of labor solidarity. Until recent decades cheap land and the 
ever-present possibility or probability that the employee might 
become a small employer were effective means of alienating the 
ambitious and the forceful workers from enthusiastic and contin¬ 
uous adherence to the policies of trade unionism. 

LABOR TURNOVER AND MORALE 

One of the master tests of good management is the rate of labor 
turnover — the size of the procession into and out of a plant. 
The cost of a large labor turnover due to the termination of the 
service of one worker and his replacement by another varies with 

1 Forbes , Oct. 15, 1928. 

2 Dennison, H. S., Organization Engineering , pp. 73 ff. 


286 


LABOR PROBLEMS 


different types of industry and jobs. The costs may be classified 
as hiring, instruction of the new worker, increased wear and tear, 
lowered production until the new worker is adjusted to his job, and 
a temporary increase in the amount of spoiled work. The termina¬ 
tion of service may be due to discharge, lay-offs, or quits. A high 
discharge rate may indicate a poor employment policy or bad 
foremanship. Lay-offs are as a rule due to irregular operation of 
the plant because of seasonal changes, to a severe dip in the business 
cycle, or to a falling off in the demand for the product or products 
put on the market by the plant. Quits may be due to the same 
causes as discharges, to undesirable working conditions, to moving 
out of town, to sickness, old age, or death, or to a multitude of 
other causes. Obviously, every plant will have some labor turn¬ 
over in a year. The unnecessary terminations and, consequently, 
the unnecessary hiring indicate poor management and “ industrial 
turmoil.” 

A good employment department which makes a careful and in¬ 
telligent selection of workers is an important factor in reducing 
labor turnover. One retail store is reported to have reduced its 
labor turnover from 700 to 300 per cent in one year after making 
two changes in its employment practice — new methods in hiring 
were introduced, and the store closed at noon on Saturdays during 
the summer months. The greatest amount of turnover usually 
occurs in the first year or half-year before the worker feels at home 
in his new workplace. An example of high labor turnover is 
furnished by a firm manufacturing rugs and carpets. Roughly 
speaking, three out of every four employees had been hired within 
the preceding twelve months. On the other hand, a large corpora¬ 
tion producing electrical appliances was proud of the fact that at 
least 50 per cent of its employees were five-year (or over) men. 
Among other important factors making for the stability of a labor 
force are: attractive wages, steady employment, agreeable work, 
and a short working day or week. 

The mobility of labor is a product of liberty; it is at a minimum 
under slavery or feudalism or in case of convict labor. It is not 
undesirable from the standpoint of progress to bring new blood into 
an industrial organization. Old or inefficient employees must be 
from time to time retired or removed. The worker who has been 
employed in several plants possesses a diversified, and often de- 


HUMAN ENGINEERING 


287 

sirable, experience. He has a feeling of independence, and wage 
rates may be somewhat higher because of labor mobility. It has 
been pointed out that other labor losses are as important as those 
connected with labor turnover. Irregular attendance and lack of 
punctuality will reduce the efficiency of a labor force. Failure to 
keep the force up to a high standard of efficiency because of ex¬ 
cessive fatigue, low morale, lack of interest, and other personnel 
matters will also be expensive and demoralizing. 


LEADERSHIP IN INDUSTRY 

In the study of human engineering is included a consideration of 
the qualities which make for leadership and of the development of 
morale as well as the specialized functions usually outlined. Em¬ 
ployers in the period, 1919-1930, placed an increasing emphasis 
upon friendly relations with employees and less upon disciplinary 
measures of the coercive type. After the dark clouds of the 
depression are lifted, it may reasonably be anticipated that this 
trend will be resumed. However, continued progress toward better 
personnel relationships and toward industrial goodwill is dependent 
in no small measure upon good leadership. Poor leadership may 
easily put a plant in low gear and keep it in that condition. How 
to get men to do their best — that is the function of leadership. 
The support and loyalty of workers must be earned by the man¬ 
agement. What management gets out of an organization usually 
depends upon what management puts into it. “The leader, it 
must be repeatedly emphasized, is not a beguiler, a bully, a seducer, 
or a hypnotist in respect to the purposes of those whom he leads.” 1 

The industrial leaders of today are the modern equivalents of 
primitive tribal chiefs, of the armored knights of the Middle Ages, 
or of the sea captains of a few generations ago. But the marks of 
leadership change from time to time. The foreman who shouts and 
swears at his men, the narrow “dehumanized specialist” who has 
no interest in workers, or the executive who keeps aloof from the 
rank and file of workers in the plant, are not real creative leaders. 
Under scientific management the whim of the executive is replaced 
by orders based upon “the law of the situation.” Leadership is 
“depersonalized.” From this point of view, management in in- 
1 Tead, O., Human Nature and Management , p. 171. 


288 


LABOR PROBLEMS 


dustry is not so much authority, power, or control over others 
as it is the development of “ sensible working arrangements.” 
Good personnel methods will minimize the assertion of authority 
The skilled industrial leader will not be forced into a position in 
which the inventiveness, the initiative, and the interest of the 
workers in the organization are working against rather than with 
him. His organization will “cooperate as well as operate.” 

A leader should have confidence in himself, should know what he 
wants and how to get what he wishes. A vacillating, uncertain, 
timid man will not make a great leader. In a democracy the ideal 
is to develop initiative and capacity in the masses of people, to 
make leadership rest upon expert knowledge and ability rather 
than upon emotional power. Leaders in a democracy should be 
expected to give reasons for their faith. 

A leader in industry is a morale builder; he is “an influencer”; 
he is a problem solver. To develop morale, the initiative and the 
interest of the rank and file as well as of the lesser executives must 
be enlisted. The adoption of definite purposes and the spreading 
among the staff of a knowledge of these purposes are essential to a 
high morale. Purposes and programs, if morale building, must 
square with the wants and aims of individual members of the 
organization. The problem of efficient control of industry is con¬ 
nected with the removal of the power and authority now unfor¬ 
tunately placed in the hands of speculators, stock-market financiers, 
absentee and drifting stockholders, and placing it in the hands of 
men possessing the engineer type of mind. Industrial leaders of 
the post-depression days, it may reasonably be anticipated, will be 
interested in production and service problems rather than in purely 
pecuniary or financial matters. 

REFERENCES 

Baridon, F. E., and Loomis, E. H., Personnel Problems , Chaps. 2,4, and 5 
Dennison, H. S., Organization Engineering 

Gray, W. R., “Leadership — Is it Untaught and Unteachable?” Man¬ 
agement Review, Vol. 17, pp. 75 ff. 

Hoopingarner, D. L., Labor Relations in Industry 
Metcalf, H. C., Editor, Business Management as a Profession, Chaps 
19-21 

-, Editor, Scientific Foundations of Business Administration , Chap. 10 


HUMAN ENGINEERING 


289 


Scott, W. D., and Clothier, R. C., Personnel Administration 
Slichter, S. H., Turnover of Factory Labor 

Stone, R. W., Personnel Management , American Management Associa¬ 
tion, Personnel Series, No. 14 (1932) 

Tead, O., Annals of the American Academy of Political and Social Science, 
May, 1930, pp. 110-119 

-, Human Nature and Management, Chap. 12 

-, and Metcalf, H. C., Personnel Administration 

Wissler, W., Business Administration, Chaps. 13 and 24 


/ 


CHAPTER XVII 


MAKING WORK INTERESTING 

CAN WORK BE MADE INTERESTING? 

Many of the fundamental concepts of American democracy may 
be traced back to the pioneers of the days of Jackson and William 
Henry Harrison; and Americans are quite inclined to believe that 
industry until recent years has ever taken the form of the small- 
scale business of the period from 1800-1850. We are disappointed 
if the workers of today do not display the same interest in their 
work as did the pioneer farmer or the small-shop craftsman when 
working for himself. The employer and the man-on-the-corner 
today expect the carefully directed worker, deprived of all op¬ 
portunity for initiative, self-assertion, or responsibility, doing a 
certain simple task over and over again, to exhibit the interest and 
zeal which is traditionally ascribed to the pioneer American. The 
common mode of procedure has been vigorously to denounce the 
worker of today, especially if he be a member of a labor organiza¬ 
tion. Few have stopped to inquire: Why are conditions as they 
are? What steps will insure betterment? 

But, with certain exceptions such as are presented by the gilds- 
men of Western Europe and by the American pioneers who virtually 
employed themselves, history discloses that from the early days 
when the captives in battle were forced to till the soil for the 
benefit of their conquerors, through the long hopeless ages of slavery 
and serfdom, to the modern wage system with its definite contrac¬ 
tual payment of money wages, the great mass of the world’s workers 
have been dragged unwillingly into productive activity. Compul¬ 
sion — the fear of the lash, of discharge, of hunger, and of the lack 
of comforts — has been the potent, but negative, force which has 
throughout the ages hastened the steps of the lagging worker. 
This negative incentive has not made and cannot make for ef¬ 
ficiency, for joyful and creative work. Coercion will not produce 
good work; it is first necessary “to produce desire in the heart 

290 


MAKING WORK INTERESTING 


291 

of the workman to do good work.” “Man’s place in industry is 
not to be mastered but to provide free and willing service.” 

Even today, according to critics of the present industrial situa¬ 
tion, “the whole industrial arrangement is carried on without the 
force of productive intention; it is carried forward against a dis¬ 
inclination to produce”; and a disinclination to produce will in¬ 
evitably breed unreliability and inefficiency. Consequently, the 
present industrial arrangement in common with the earlier forms 
known as slavery and serfdom must be inefficient from the stand¬ 
point of output, and also deadening and debilitating in its effect 
upon the individual workers. In this connection it may be pointed 
out that the growth of the corporate form of business and the 
tendency to interpose “layers of corporate securities” between 
the owners and the property actually owned, tends to destroy the 
“pride of ownership” and the “joy of workmanship” which the 
owner so often exhibited in the days when smaller-scale and more 
simple industrial enterprises were the rule. The typical owner 
of corporate securities is an investor or a speculator rather than a 
person interested in the technical processes of production. The tend¬ 
ency toward routine, toward scientific management, and toward 
centralized and depersonalized supervision in modern large-scale 
industry is making “individuality in industry” a rare phenomenon. 

The negative incentives furnished by compulsion are not only 
inefficient now as was also true in the days of slavery and of serf¬ 
dom, but, in an era of democracy and of compulsory education for 
all classes, unless reenforced and modified by others of a more 
inspiring and stimulating type, the negative incentives provide 
social dynamite which will sooner or later put civilization in im¬ 
minent danger of a serious social upheaval. 

The complex of instincts, habits, passions, prejudices, likes, and 
aversions called man is the slowly and painfully evolved product of 
unnumbered generations. Man is the resultant of generations in 
which there was little of routine, regularity, or reasoning. Man is 
endowed with almost ineradicable instincts and impulses which 
are the fruits of environmental conditions in the ages past. Mod¬ 
ern industry on the contrary is a recent and artificial contrivance; 
it is the gift of the last two or three generations. The man who has 
become a cog in the gigantic articulated modern treadmill is sub¬ 
jected to experiences and influences which cut across, thwart, and 


292 


LABOR PROBLEMS 


inhibit many of the impulses and keen desires which he has in¬ 
herited from the long ago. 

The primitive man disliked the kind of endeavor which called for 
regular and productive activity; he did not enjoy what we com¬ 
monly denominate work. Slavery was a social device to force the 
unwilling man to work. Slavery and serfdom were methods of 
domesticating the hunter so that he might function as an agricul¬ 
tural and industrial worker. The galley slave and those who 
tugged and strained under the lash to build the pyramids of Egypt 
worked only under stern compulsion. Biblical accounts indicate 
that work was not a joy. Writers are prone today to compare the 
distaste for routine work manifested by many workers of the 
present time with a glorified picture of the craftsman of the Middle 
Ages. Such a comparison is misleading. A more accurate method 
would be to place the slave, the serf, and the unskilled vagabond 
of earlier epochs alongside of the unskilled routine worker of today. 
The members of both of these groups disliked the work they were 
forced to undertake. Ancient, medieval, and modern unskilled 
workers were pleased to escape from the bondage of toil. All of 
these workers went unwillingly to their daily tasks. It has been a 
difficult matter to indoctrinate the notion of “work for work’s 
sake” into the white or any other race. Utopias never stress hard 
and regular work. The much praised American pioneers did not 
work with a high degree of regularity and continuity. Enjoyment 
of work is acquired; it is not an inheritance coming from the distant 
past of the race. “Spring fever,” the desire to hunt and to fish, 
the “lure of the open road,” the call to adventure and change, are 
the primitive in man rising to the surface. Men and women also 
cling tenaciously to the notion that the performance of hard manual 
labor is a mark of inferiority. We often dislike the appearance of 
having to work more than we dislike the work itself. Leisure is 
not merely escape from work; it is a badge of superiority or worth¬ 
whileness. A wide gulf between labor and pleasure has been the 
usual and not the uncommon state of affairs throughout the ages 
which have elapsed since agriculture made its first hesitating en¬ 
trance upon the stage of human history. 

If men have been so anxious to avoid work or the appearance of 
having to perform useful service, it seems strange, writers have 
suggested, that little has been done to study methods of making 


MAKING WORK INTERESTING 


293 


work interesting and attractive. Evidently two important reasons 
may be assigned for this neglect. In the first place, such investiga¬ 
tion would of necessity require accurate knowledge of that complex 
organism, the human being; it would require an understanding of 
biology, psychology, and social psychology. Only recently have 
these sciences obtained a foothold. In the second place, since work 
was a function to be performed by slaves, serfs, inferiors, why 
bother about agreeableness or disagreeableness? Only after the 
world enters an epoch in which the common man has been dis¬ 
covered, in which education and voting privileges for all are advo¬ 
cated, would the attention be finally drawn to the possibilities of 
changing work from an incubus upon the human race to a means of 
joyful expression. Again, the advent of power-driven machinery 
has finally forced men to turn their attention to efficient methods 
of doing work. First came scientific management, which was 
interested in technical performance; but recently it has dawned 
upon business managers that efficiency is more than the technical 
excellence of machinery and methods of accounting. The next 
step is in human engineering, which signifies the application of 
scientific methods for obtaining interest in teamwork, if possible, 
for the workers of modern industry. Is such a hope merely a 
utopian dream or may it come true? 

The problem of the social sciences — if they have any adequate 
grounds for demanding the appellation of sciences — is to hasten 
the adjustment of associated men to the conditions of modern life 
and to reduce the friction accompanying such adjustment. To 
accomplish this purpose evidently both the environmental con¬ 
ditions and the psychology of human beings must be carefully 
investigated. There is reason for believing that the fundamental 
impulses and instincts of mankind have changed little since primi¬ 
tive man appeared. According to McDougal “men are moved by 
a variety of impulses whose nature has been determined through 
long ages of evolutionary process without reference to the life of 
man in civilized society.” Such being the case, our problem be¬ 
comes one of finding, out what these fundamental impulses, in¬ 
stincts, and emotions are, and of finding expression for them in 
ways which make for uplift and racial betterment. Repression 
inevitably spells danger. It is quite clear that the instincts which 
long racial experience has evaluated as essential to survival can- 


294 


LABOR PROBLEMS 


not be easily swept aside by a few generations of regular industry, 
and of relative peace and plenty. We must reckon with them. To 
continue to disregard them is to close the door upon the possibility 
of making economics or sociology scientific. Assuming that human 
nature is not plastic or easy to modify, the most practical solution 
of the problem of industrial efficiency may be judged to lie in a 
definite and planned attempt so to modify industrial conditions 
as to offer so far as possible an outlet for the underlying impulses 
of mankind. 

Heretofore, economists and other social scientists have been 
prone to consider men — workingmen at least — to be single- 
track individuals — persons of few and fairly simple guiding 
instincts and impulses. We have built up a sort of straw man and 
then proceeded with calmness to argue on the basis of this artificial, 
air-castle-like development of our own making. Students of Ameri¬ 
can industrial problems have rarely stopped to study the actual 
flesh-and-blood man and his motives. We have paid little atten¬ 
tion to the problem of adapting industry and environment to men. 
We have naively accepted the crude idea that the great mass of 
people must fit into the new industrial environment even though it 
be quite dissimilar to that of preceding ages — the ages in which the 
type of man was molded and cast. It was a maxim of Catherine II 
of Russia that a ruler operates on human skin which is exception¬ 
ally ticklish. The same proposition holds in regard to direction 
and control in the industrial field. It is a ticklish proposition in 
which the wants, prejudices, preconceived notions, ambitions, and 
instincts of human beings cannot be disregarded with impunity. 

For example, are industrial inefficiency and restriction of output 
due to the lack of potent incentives which touch the rank and file of 
industrial workers? Upon the correct answer to this question de¬ 
pends the possibility of formulating worthwhile plans for industrial 
improvement. The late Professor Parker declared that laziness, 
in so far as it exists, is “an artificial habit, inculcated by civiliza¬ 
tion.” The slacker in industry is produced by “the job and the 
industrial environment.” Students of child life are practically 
agreed that the normal healthy child is neither lazy nor bad. The 
artificial environment which adults ignorantly or selfishly provide 
often makes him appear to be so. The normal adult is only the 
youth overlaid with custom, precepts, inhibitions, and experiences. 


MAKING WORK INTERESTING 


295 


On the other hand, a recent writer who is a student of psychology 
quite emphatically asserts that “ peoples and individuals are by 
nature indolent.” And certainly, unless prodded by opposition, 
rivalry, changed environmental conditions, unsatisfied wants, or 
some other potent incentives, human beings tend to settle down 
comfortably into ruts, amiably to let well enough alone, and to be 
satisfied with much less than their best or near-best. The normal 
individual may not be lazy in the sense of desiring merely to loaf; 
but he does not love the routine of present-day industry as a regular 
day-after-day, year-in and year-out process from which the only 
tangible result from his point of view is a meager living for himself 
and family accompanied by extreme weariness of the flesh. Normal 
men may indeed possess an imperious instinct of workmanship or 
contrivance; but the up-to-date factory practicing minute sub¬ 
division of labor is equipped with excellent means of inhibiting this 
instinct. Undoubtedly, a worker may become so inured to routine 
that he will feel uncomfortable when out of the traces of his daily 
occupation; but such is an acquired feeling. It does not make for 
the zest and interest which lead men to push joyously ahead and up 
to newer planes of achievement. 

The two points of view discussed above are not necessarily con¬ 
tradictory. Normal human beings are so constituted as to enjoy 
activity which makes for worthwhile results. What is considered 
to be worthwhile obviously changes with time, place, and kind of 
civilization. But the normal active, non-lazy individual placed in 
an environment chiefly characterized by monotony and the lack of 
incentives for improvement or change, will after a time accept the 
present achievements as sufficient and follow the daily routine 
without enthusiasm. Certain vigorous and recalcitrant persons will 
rebel and try to escape from the humdrum and correctness of the 
place and period; these are the heretics, the radicals, the I.W.W.’s. 

One of our able and successful business managers out of his 
experience has put the matter very clearly. “The desire for self- 
expression is one of the most fundamental instincts in human 
nature, and unless it is satisfied it is bound to manifest itself in 
all sorts of abnormal ways which today are working such havoc 
in society.” The late John E. Williams testified before the Com¬ 
mission on Industrial Relations that “the I.W.W.’s would not be 
very different from the other people if they had the proper organ of 


LABOR PROBLEMS 


296 

expression. It is just that sense of futility of their lot, of their 
means of action, that makes people resort to these measures of 
force.” The last sentence is worthy of more than passing notice; 
it presents a vital fact from a man of much practical experience. 
Unfortunately industry is offering little opportunity for self- 
expression to the average worker; it does not stimulate the 
interest of the worker in his work. In the use of potent incentives, 
modern large-scale routine industry has progressed little beyond 
slavery and serfdom. 

It is too much to expect men to act conservatively and according 
to the customary procedure when they have little or no opportunity 
for the normal expression of human wants and desires. If they 
are unable to satisfy the instinct for food or for self-assertion, 
they will inevitably become biassed, gnarled, knotted, and perverse 
individuals. To make them more like the well-to-do conservative, 
the unblessed must be made more well-to-do. The much-abused 
and much-feared I.W.W. is composed largely of men whose in¬ 
stincts for family life, for acquisition of wealth, for contrivance or 
workmanship, and for self-assertion have been inhibited. Better 
treatment, better wages, opportunity in youth to acquire a little 
property are solvents for extreme radicalism. 

Psychologists point out that changed environments have fre¬ 
quently changed individuals in an extraordinary manner — from 
ne’er-do-wells to leaders, from criminality to useful citizenship, 
from sluggishness to a condition of mental alertness. A change in 
industrial methods, in the workshop conditions, in the incentives to 
activity, may likewise work marvelous changes in the activities 
and the attitude of workers. “ Primitive man, like his animal 
ancestors, expended tremendous strength and, having won his 
fight, relapsed into inaction, revelling in the fruits of victory.” 1 
The man in the factory, the mine, or the store is capable of extraor¬ 
dinary activity on occasion — note his activity when witnessing 
a close baseball game, when on a strike, or in case of an emergency 
such as a fire. The vocation of the mass of wage workers today 
offers very little to fire the workers or to arouse their latent energy 
or talents; there are few or no episodes which stir the blood and 
call for temporary excessive or invigorating expenditure of effort. 
As a consequence the average worker soon exhibits the all too 
1 Swift, Psychology and the Day’s Work, pp. 28-29. 


MAKING WORK INTERESTING 


297 


familiar “ tendency to minimum effort.” In modern industry, 
except for a small group, “improvement stimulus” is practically 
Lacking. The great mass of unstimulated workers become un¬ 
interested and inefficient workers; they do not feel those incentives 
which stir human beings into activity. Yet, business competition 
can be made to offer opportunities for potent stimuli. One force, 
group, or gang may become interested in its performance as com¬ 
pared with that of another or with its preceding performance. 
But, unless the workers have some very definite voice in determin¬ 
ing the conditions of rivalry, in sharing in its benefits, it is presently 
looked upon as a scheme on the part of the employer to increase 
profits — and too often with excellent reasons for such conclusion. 

The problem is: Can routine, subdivided industry be made 
interesting? Can the “creative impulse” be given play? Can the 
“adventure of business” be opened up to the wage workers? Or, 
must plans for betterment be directed solely or, at least in a large 
measure, toward securing the short working day and such utiliza¬ 
tion of leisure time as will make for physical, mental, and moral 
uplift? The second alternative is one worthy of promotion; but 
our present concern is with the former. In fact, if more potent 
incentives were disclosed in industry, if workers became more 
interested in their work, if one’s work expressed in some degree his 
individuality, and if the workers were given a share in the responsi¬ 
bility of management, the recreation problem would be less difficult 
of solution. The increasing mechanization of industry is giving 
workers less of routine and back-breaking work, and is, conse¬ 
quently, making the problem of interest in work less difficult of 
solution. 


INSTINCTS 

When the small boy or the savage stubs his toe on a stone, he 
usually vents his wrath on the stone. Many employers and foremen 
are still in the childish or primitive stage in regard to personnel 
relations. Fighting, calling bad names, putting on the screws, 
showing labor its place, are typical reactions in the case of labor 
difficulties. Workers are called lazy, careless, good-for-nothing, 
ornery; but rarely is an effort made to ascertain the cause or causes 
of laziness or carelessness. Too frequently the individual is blamed 
when the environmental conditions are at fault. If a chemical 


298 


LABOR PROBLEMS 


process fails to produce the expected results or if an engine loses 
power, an investigation by experts follows; if a worker or a gang 
of laborers fails to deliver the goods, the employer or foreman as a 
rule becomes angry and threatens the workers in lurid phraseology. 
But the lack of the “ will-to-work ” and carelessness are often the 
products of the physical condition of the worker, the working 
environment, the conditions at home, the attitude of the foreman, 
fatigue, or other causes. Practically all persons in normal health 
prefer to do good work rather than poor, and desire to do a job 
rather than to “soldier” on the job. The scientific and the rational 
attitude is to attempt to ascertain and remove the causes of in¬ 
efficiency and illwill in industry. 

In order to develop interest in work, certain fundamental human 
instincts, impulses, or desires must be partially satisfied. The 
problem is to utilize all the various incentives which appeal to the 
typical person and to eliminate as far as feasible all deterrents and 
hindrances to interest in work, or it is to find a way of carrying on 
industry which will “not hamper and contaminate” the instinctive 
aims and impulses of the men and women engaged therein. Too 
many American managers naively accept the notion that the only 
potent incentive for workers is financial. The skillful manager of 
personnel will endeavor to obtain teamwork among incentives. 
He will aim to prevent the financial or economic incentive pulling 
in one direction while other incentives are pulling in another. 
Five instincts, impulses, or desires with which the industrial psy¬ 
chologist and personnel director must constantly reckon are: 

1. The desire for recognition or approval, the “wish for worth,” 
or the desire to avoid a feeling of inferiority. 

2. The desire for adventure, for new experiences, for change or 
for “climax” or for “the precipitous element” in life. 

3. The desire for security, especially from the economic evils 
incident to joblessness, industrial accident, sickness, and poverty in 
old age. 

4. The creative impulse or the instinct of workmanship. 

5. The social instinct or the herd instinct, or the desire for friend¬ 
ship or companionship. 

In other words, men and women seek from life four fundamental 
satisfactions: 


MAKING WORK INTERESTING 


299 

1. A measure of security of life, job, income, etc. 

2. Recognition by others for what we have done or what we are. 

3. Some measure of adventure — either directly or indirectly. 

4. Companionship or friendship. We like to belong to a group. 

Industry should try to cater to these satisfactions. 1 

TACTORS IN DEVELOPING INTEREST IN WORK 

Good management will endeavor to utilize in some measure all 
of the factors enumerated below: 

1. Financial incentives. 2 

2. Careful selection and a systematic plan for promotion and 
transfer of workers. 3 

3. Job security. 

4. Knowledge that one’s job is worthwhile. 

5. Working conditions. 

6. Attitude of foremen and bosses. 

7. Attitude of others toward one’s job. 

8. Rivalry. 

9. Conditions outside the factory. 

The practical problem is that of removing hindrances and deterrents 
as well as that of obtaining teamwork among these incentives. The 
economic or financial motive is basic in industry. The employee 
must receive a reasonable wage while working under good condi¬ 
tions before the management can hope to enlist the former’s in¬ 
terest; but the surge of enthusiasm for workmanlike endeavor can 
only be obtained through incentives other than financial. In the 
words of a well-known industrial leader, “organizations, communi¬ 
ties, and civilizations, as well as individuals, which come to be 
actuated principally by the economic motives tend to become short¬ 
sighted, hard, insensitive, and unimaginative.” 4 Careful selection 
of workers and instruction in regard to the best methods of doing 
the work are vital factors in developing interest in the job. Mo¬ 
notony of work and distaste for a certain job depend in no small 
degree upon the worker himself. One man finds a particular job 
interesting while another sees only drudgery. 

1 See Factory and Industrial Management , July, 1929, p. 41. 

2 See Chapter on Methods of Compensation. 

3 See Chapter on Human Engineering. 

4 Dennison, H. S., Organization Engineering, p. 73. 


300 


LABOR PROBLEMS 


Insecurity and fear are important sources of industrial discontent 
and lack of interest in the job. “It is fear that sits at the heart of 
industry. Fear of losing the job, fear of the lay-off, fear of un¬ 
merited as well as merited discipline, fear of wage-cutting, of 
arbitrary treatment of many kinds. Fear of what would result if 
one complained shuts one’s mouth.” 1 Few workers in a non-union 
shop would dare voice a criticism of those in authority. The “will- 
to-do” does not thrive in an atmosphere of uncertainty and in¬ 
security of job. Restriction of output is often caused by insecurity 
of the job. The man without reasonable security of job does not 
take a long-range view of anything. The present looms so large 
and so important that past and future are neglected. Irregularity 
in industry breeds the tramp and the hobo. We cannot hope to 
tap the latent energies of a worker such as interest, zest, the creative 
impulse, and the will-to-do, until security is offered. Among the 
dominant interests of the typical worker are “ to have a comfortable 
home, and a family, and to obtain security against sickness, un¬ 
employment, and want in old age.” Until the worker obtains the 
security for his job that the investor is offered for his investment, 
there is little hope of peaceful and harmonious industrial relations. 
Unless the job can be safeguarded, management cannot expect the 
cooperation of workers. 

The knowledge of the part one’s job plays in the industry as a 
whole helps to stir and retain interest in a job. To do a useless act, 
to do something the reason for which is unknown, to produce a part 
of a complete job without knowing the purpose of the part, never 
stirs the imagination or stimulates the desire to work. Under such 
conditions the job is a meaningless piece of drudgery to be per¬ 
formed as a matter of routine in order to get a living or to avoid 
punishment. Workers often take pride in doing a job which is 
recognized as a small, but essential, part of a finished product. 
There are, however, certain types of workers who are not interested 
in the “why” of things or processes. “In digging the Panama 
Canal it is said that the thousands of workers went at their daily 
task with a right good will because they felt it as part of a stupen¬ 
dous, everlasting achievement — the Canal.” 2 

Bad lighting, poor ventilation, and improper heating in a factory 

1 International Molders’ Journal, March, 1930, p. 144. 

2 Ross, E. A., Principles of Sociology , p. 306. 


MAKING WORK INTERESTING 


301 


reduce the output of the workers. Men and women obliged to 
work in an awkward fashion, in poorly lighted, ventilated, and 
heated workplaces, or in dangerous locations, soon lose the will- 
to-do, morale is lowered, and antagonism toward management and 
indifference toward the quality and quantity of output develop. 
Interest in work is not easy to generate in such an atmosphere. 

A “grouchy” foreman will soon transform enthusiasm over one’s 
job into illwill and systematic reduction of output. A foreman 
who does not have favorites, who gives credit to workers for their 
own suggestions and improvements, who gives the workers under 
him a square deal, will provide the soil in which interest in work will 
flourish. From the worker’s point of view, the real representative 
of the employing company is the foreman. A former member of 
one of my classes told of a knitting mill in which he worked one 
summer. In one department stockings were inspected by pulling 
them over a board and searching for imperfections. This was a 
monotonous job involving danger of eye-strain. There was never 
a sign of approbation from the management in case of good work; 
but in case of errors a “bawling out” was sure to follow. No one 
liked this job; and the workers gave “any excuse to get a day off.” 
In this particular situation, the workers were doing monotonous 
work which required close attention, and to complete the tragedy 
they were supervised by a bungling foreman whose only notion of 
stimulating workers consisted in fierce denunciations in the presence 
of others, for mistakes. The supervisory force was adding to, 
instead of reducing, the irritations which the conditions of work 
produced. The words of another seem to apply in this not unique 
case — “The cost of criticizing workers openly far exceeds the time 
it takes.” Workers find ways of “getting even” with the foreman 
who is a driver or the company which adopts the “speed-up” 
system. “The men come to regard themselves as victims of a 
system . . . They stall, they sabotage, they defraud the com¬ 
pany.” The notion is accepted by the workers under such condi¬ 
tions “ that since the company is out to trim us, we had better lose 
no opportunities of gyping the company.” 1 Even in a time of 
depression, the old methods of driving and of threatening discharge 
do not prove successful. In the words of a plant superintendent, 
“you can’t threaten a man when he’s getting maybe only five days 
1 Staebler, N., Harper's Magazine , Feb., 1931, p. 3^ 


3 02 


LABOR PROBLEMS 


of work every other week. He just looks at you. He’s probably 
been worrying for months about his job, and home conditions are 
not too good. Discharge would be just one thing more; if it comes, 
it comes.” 1 

To a degree rarely recognized, interest in work is due to the 
attitude of others toward the job. One keen student of labor 
conditions has declared that “the final joy of work is settled by the 
social standing of the worker awarded by his fellow citizens.” 
Men in all walks of life have a sharp hunger for approval and a 
corresponding distaste for whatever tends toward scorn, ridicule, 
or inferiority. Each human being craves a recognition of his own 
individuality. The consciousness of power is sweet to the great 
majority. Some like the pomp and publicity which accompanies 
the exercise of authority; others are willing to be “the power be¬ 
hind the throne” — to be the invisible government. The captains 
of industry and labor leaders have usually been self-assertive men. 
Publicity, “the thrill of prestige and fame,” possesses great attrac¬ 
tions for all except a few choice souls. The prestige and publicity 
given to successful college athletes are essential factors in develop¬ 
ing potent incentives. A football game without spectators and 
without newspaper or other forms of publicity will not be character¬ 
ized by strenuous endeavor. 

Publicity and prestige for excellent workers would transform 
many a listless group into an alert and active organization. A 
student related this story which illustrates the effect of this trait 
of men and women. A shop in which the student had worked ex¬ 
perienced great difficulty in getting orders filled on time. The 
shipping clerk was considered to be of about the same rank and 
dignity as the other workers in the shop. The company finally 
gave him the title of production manager and put his name on the 
door of the shipping room. Thereafter, orders were promptly 
filled. Men prefer to play golf rather than to hoe corn or work in a 
garden, in a large measure because of the attitude of others toward 
such activity. Garden contests with appropriate publicity have 
induced greater interest in gardening. 

Closely related to the preceding factor is that of rivalry between 
individuals, between groups, and with one’s own preceding records. 
Competition and rivalry stimulate interest in any activity, whether 
1 Factory and Industrial Management , Aug., 1932, p. 323. 


MAKING WORK INTERESTING 


303 


work or play. A few years ago when the consolidation of two 
parallel railway systems was proposed, it was pointed out that the 
rivalry between these two roads had kept both in excellent condi¬ 
tion. Employees of all grades on one road were anxious to make a 
creditable showing in comparison with those of the rival railway. 
Fuel-saving contests among railway engineers and firemen have 
been successfully utilized in reducing waste and in promoting 
better operation. 1 The use of records as to past performance in 
regard to quality and quantity may be made as potent in industry 
as in athletics in stimulating interest in improved performance. 
Men in subordinate positions, in the great drab rank and file, 
compensate for their lack of power and prestige by swaggering and 
boasting. Speeders, pace-setters, and fast men gloat over their 
fellow workers. If the chance of beating one’s competitors is 
excellent, rivalry spurs one on to make an additional effort. 
Prizes, publicity in the company paper, ratings, and the like 
stimulate wage workers — and others. Industrial democracy, like 
political democracy, possesses an appeal to the instinct of self- 
assertion. 

The small boy likes to boast of his own strength and achieve¬ 
ments, and of the courage of his father. Mature men who have 
achieved little of success are prone to allude to their prowess in the 
past. Man, no matter what his station in life may be, loves to 
recount to an admiring group his remarkable achievements during 
the day. We love inequality and privilege provided the cards are 
stacked in our favor. The fraternal organization, with its Grand 
High Potentate and its lesser lights, caters to this instinct. The 
desire to get one’s name in the newspaper is by no means uncommon. 
Much of the popularity of games such as football grows directly 
out of the popularity and publicity gained by the players. Certain 
varieties of “conspicuous consumption” are indulged in chiefly to 
indicate the spending capacity and, hence, the income and pre¬ 
sumably the worth of the spender or of the spender’s family. The 
idler and the worker, the professional man and the mechanic, the 
rich and the poor, and the young and the old, are in varying degrees 
affected by this primal impulse. Content and zest in industry go 
out .of the door when little or no opportunity is offered for the 
nourishment of this impulse to self-assertion and rivalry. 

1 Slichter, S., Quarterly Journal of Economics , May, 1929. 


304 


LABOR PROBLEMS 


On the other hand, no one likes to be classified as a cog, a number, 
or a commodity. To be treated as insignificant is distasteful. To 
feel that one is of little consequence and near to the “zero of 
insignificance,” runs counter to deep-seated and persistent impulses 
and instincts. It is especially pleasing to have others recognize our 
importance and significance. Forces which develop within the 
worker a feeling that he is being belittled or degraded make for 
unrest and suspicion. One of the potent reasons for opposition to 
the introduction of machinery and more recently to the develop¬ 
ment of scientific management programs has been the more or 
less conscious feeling that in some way these innovations tended to 
degrade the worker by taking away his craftsmanship. 

A person’s behavior in a plant, office, store, or classroom is greatly 
influenced by conditions external to the plant itself. Sickness of a 
member of the family, financial worries, domestic difficulties, love 
affairs, lack of opportunities for wholesome recreation, climatic 
conditions, and a multitude of other influences outside the plant 
are factors influencing one’s attitude toward his work. It has been 
recorded that the new secretary of the Chamber of Commerce of a 
Western mining town found a distressingly large labor turnover in 
the large mining company of the district. He soon discovered that 
it was not wages or hours of work which caused unrest. The dis¬ 
satisfaction was due to the fact that the town in which the workers 
must live was a dreary, unattractive place with little or no op¬ 
portunities for wholesome recreation. The mining company was 
induced to provide a ball field, a running track, tennis courts, and 
other facilities for outdoor sports. A band and a dramatic group 
were organized. Entertainment was provided for the men and their 
families; and the procession out of the mine and town stopped. 
A publishing house moved from a large Eastern city to a smaller 
city of the Middle West. The president of the corporation in¬ 
dicated that the particular town was selected because of its “live¬ 
ableness.” 

The rank and file of American workers are not anxious to assume 
the burdens of business management; but the typical worker is 
intensely interested in such matters as a fair wage, a short working 
day or week with its accompaniment of leisure, good working con¬ 
ditions, a job which is reasonably secure, a well-considered promo¬ 
tion plan, good foremen and bosses who will allow a man to keep 


MAKING WORK INTERESTING 


305 


his self-respect, some opportunity for expression of opinion in regard 
to the work and working conditions through shop committees and 
suggestions systems, and inspiring leadership. 1 The management 
which attempts to study the human equation, to treat its workers 
in accord with the points outlined in this and other chapters of this 
book, will rarely have serious difficulties in gaining the goodwill 
of its employees and in stimulating interest in the work and 
prestige of the firm. It will be known as a good company to work 
for. If, however, the management merely puts up a false front in 
order to hoodwink the workers into believing that their purpose in 
business is broader than profit making, that management cannot 
long expect to retain the goodwill of its employees. The mental 
attitude of workers is of vital importance in human engineering. 

The new type of leader in industry is studying men. He pays 
good wages, maintains a model plant, uses some form of the shop- 
committee system, and makes it possible for his employees to hold 
up their heads and be men. The up^to-date industrial leader rec¬ 
ognizes that human energy can only be released and properly 
guided by utilizing the motives which underlie and determine 
human conduct. Human engineering may tend toward industrial 
democracy; it may spell democracy and mistakes instead of in¬ 
dustrial autocracy and smooth action. But in view of the peculiar 
make-up of the human being, autocracy and smooth action may 
spell inefficiency through subtle forms of sabotage and the lack of 
zest or interest in the industrial process or in the amount or quality 
of output. 


REFERENCES 

Burtt, H. E., Psychology and Industrial Efficiency, Chap. 7 
Chant, S. N. F., “Measuring the Factors that Make a Job Interesting,” 
The Personnel Journal, June, 1932 
Dennison, H. S., Organization Engineering 

Staebler, N., “The American System in Job-Land,” Harper's Maga¬ 
zine, Feb., 1931 

Tead, O., Human Nature and Management 

1 Quotation from Hopf, H. A., in Trained Men, Autumn, 1929. 


CHAPTER XVIII 


PURPOSE IN INDUSTRY 

THE FUTURE OF HUMAN ENGINEERING 

A scientific method may be used to accomplish results which 
one group may hold to be good and another assert to be undesirable. 
It is also clear that science and scientific methods may be utilized 
for destructive as well as constructive purposes. If employers — 
investors and managers — and wage earners are brought into 
agreement as to ends, aims, or purposes of human engineering, it 
will not be exceedingly difficult to unite upon methods of ac¬ 
complishing the results desired. The prime difficulties in regard 
to the successful introduction of scientific methods into the manage¬ 
ment of men and the direction of industrial processes are experi¬ 
enced because of differences in aim and because of mutual distrust. 
If, for example, the prime purpose of an enterprise be increase in 
dividends for absentee stockholders, it is reasonable to anticipate 
antagonism on the part of the wage workers, or, at least, a lack of 
enthusiastic cooperation. Science, power, and scientific manage¬ 
ment have greatly increased the productive capacity of industry. 
If progress means solely or chiefly increased profits for the investing 
group, human engineering or organization engineering will meet 
serious obstacles in developing teamwork or morale among workers. 
What is to be done with the results of greater efficiency? — is the 
question. 

As generations ago the worker was divorced from the ownership 
of the materials, tools, and output of industry and became a wage 
earner, so also the management (direction) of industry is in recent 
years being separated from ownership. The active management of 
corporations is more and more becoming employee-management, 
salaried management. A new type of professional or expert 
managers is in the making. Unless some profit-sharing or bonus 
plan is adopted, the new type of management is not directly de¬ 
pendent upon profits for income. This tendency narrows the field 

306 


7 

PURPOSE IN INDUSTR Y 


307 


in which the profit-making motive holds undisputed sway. A new 
factor is introduced into the business equation. Business purposes 
should be analyzed in the light of this new division of business 
functions. The future of human engineering is intimately linked 
with the future of the profit-making motive, with changing em¬ 
phasis upon the purposes of industry, and upon the development of 
a profession of management. 

WHAT IS THE “BUSINESS” OF BUSINESS? 

Industry is carried on for the purpose of giving benefits to those 
connected with the industry as workers, managers, and investors, 
or for the purpose of benefiting those utilizing the output of in¬ 
dustrial enterprise. In capitalistic society, doubtless the chief 
motive has been profits for investors and managers. Industry has 
been operated primarily to give income and prestige to one portion 
of the people in the industry. Satisfaction to the wage workers 
or to the consumers of the product has been almost wholly inciden¬ 
tal. The profit-getting motive, however, may undergo considerable 
changes in its form as social and industrial conditions evolve. The 
itinerant trader seeking profits will use quite different policies 
from the large store operated by a corporation. The long-range 
view of profit making is more conducive of welfare for customers 
and employees than the short-run. The large corporation with 
absentee and non-functioning stockholders and bondholders, man¬ 
aged by salaried employees who have little or no investment in 
the industry, facing directly or indirectly the probability of the 
organization of its workers, and controlled in a greater or lesser 
degree by governmental regulations, and by increasing knowledge 
on the part of customers about the quality of goods, finds the profit¬ 
making motive pointing toward quite different lines of conduct 
from that which seemed desirable to the small-scale, short-lived 
business in which ownership and management were united in the 
same person. 

Recently, the members of a club of executives within the Cham¬ 
ber of Commerce of a large American city were asked to turn in 
answers, for future discussion, to the following question: What is 
the purpose of business? Forty-two different answers were turned 
in. A few of these are cited in order to show the marked differences 


308 LABOR PROBLEMS 

in outlook and attitude. “To make profit for the owner.’’ “To 
provide adequate returns to the stockholders in the form of profit 
and employment of its people over long periods of time.” “To 
serve others.” “To render a service of some kind to community or 
nation. To make profit by so doing so as to perpetuate itself.” 
“To promote civilization.” A representative of one large organiza¬ 
tion stated that the executives of that concern had, after careful 
consideration, definitely formulated the purpose of their business as 
follows: “To serve the community, our customers, our co-workers, 
and the stockholders.” The objective of an industrial enterprise as 
outlined in the Industrial Employment Code, proposed for the 
Taylor Society, is: “ Such an objective may be defined as supplying 
goods and services with the least possible waste of human effort 
and materials, at the lowest prices consistent with good quality of 
product, fair wages, healthful working conditions, and safety and 
fair returns for capital invested.” A “plurality” of purposes is 
emphasized. Even corporations are finding that they “have souls. ” 
They are being guided in part at least by other motives than imme¬ 
diate profit making for the stockholders. Doubtless some of the 
formulations of purpose are little more than pious expressions with 
little relation to actual methods and programs. Nevertheless, the 
consideration of purpose is clarifying and significant. Two distinct 
points of view in regard to business aims were presented at a 
meeting of the American Management Association (March n, 
1932). The traditional point of view was expressed as follows: 
“It should be emphasized that a business is not created either to 
make or to sell a product. A business is created to produce profits.” 
The newer point of view of those who are facing toward the inter¬ 
dependent future rather than pioneer days was presented in the 
form of a question. “Society is coming to the point where it is 
going to ask managers: Are you running business and industry in 
a way that entitles you to a profit?” Or, if an industry is not 
operated so as to benefit the community, is it entitled to profits? 
Does not the community often pay more in the form of profits than 
is necessary or desirable? — is the implied question. 1 

1 Job Order Production Series , No. 1, p. 8, and No. 5, p. 3. American Man¬ 
agement Association. 


PURPOSE IN INDUSTRY 


309 


WHAT ARE THE DIFFERENT GROUPS IN INDUSTRY? 

The traditional division between labor and capital is obviously 
too simple to be significant in business today. There are at least 
five functional groups in the world of business. 1 These are the 
investors, the managerial group, manual and clerical workers — 
skilled and unskilled, the customers, and the general public. These 
functional groups have certain common interests and certain 
marked differences in purpose. 

The purpose of the investor group is primarily to get as large a 
return as is consistent with security of investment. Management 
united with ownership has treated labor as a commodity. Margins 
of return were turned over to the owners of capital, the investors. 
However, with the separation of ownership and control, with the 
growth of a salaried management or of profit-sharing management, 
the growing intricacy of industry, and the necessity of obtaining 
the cooperation — goodwill — of the worker, it becomes possible 
to treat capital as a commodity which must be paid a reasonable 
return in order to obtain its services in industry. The idea that 
capital should receive a steady and definite return is accepted, or 
at least is on the road toward acceptance. 

Industrial evolution is now tending to separate the capitalist 
(investor) from the administrator. Management is more and more 
becoming hired management. It is tending toward the professional 
outlook. For good or for ill, management is beginning to develop 
and accept new theories of business responsibilities — to workers, 
to customers, and to the public as well as to the stockholders of a 
corporation. The idea is developing that industry should and can 
be improved and stabilized from within, that it need not lean 
heavily upon legislation or be driven by legislation. Personnel 
management is one of the fruits of this new outlook. 

The workers are looking for as large a return as is possible with 
reasonable work and working conditions; but the workers are also 
much interested in a steady job, in an adequate and certain yearly 
income, and an opportunity for advancement. A large percentage 
of wage workers wish to do a worthwhile job in an efficient manner. 
If the interest of the worker is not enlisted, he is absent in mind. 
Too many plants suffer a high “absentia” cost and others have a 
1 Tead, Ordway, Bulletin of the Taylor Society , Dec., 1925. 


3io 


LABOR PROBLEMS 


serious “dissatisfaction” cost which does not appear in their cost 
accounts. With expensive machinery and high overhead costs, 
the management cannot afford to hire inefficient workers for low 
wages. To be successful, the manager must pay sufficient wages 
and maintain such working conditions as to get interested endeavor 
from skilled workers. If management and investors are only in¬ 
terested in profits, workers are not likely to be enthusiastic over the 
work they are doing. Furthermore, some businesses are not doing 
worthwhile kinds of work. The customers wish an adequate supply 
of goods, of good quality, and at reasonably low prices. The general 
public is interested in regularity, in efficiency of functioning, and 
in progressive leadership in industry. 

CAN THE PURPOSES OF DIFFERENT GROUPS 
BE HARMONIZED? 

Can these purposes be “integrated”? In the United States, 
profit making has been unduly emphasized because here it spells 
power, control over others, prestige, personal significance, and 
public acclaim in an unusual degree. If profits and income from 
certain sources become quite generally looked upon as tainted, or 
if such income no longer gives prestige, the desire for that sort of 
profit making fades. With changing conditions, the shining goals 
of human ambitions are modified. Old goals and ambitions fade, 
and new ones attract. Current estimates of wealth and welfare 
are subject to change. The accepted notions of what is right and 
proper change with time and place. It is clear, historically speak¬ 
ing, that the purposes of men, business men and others, change. 
The basic instincts and impulses of mankind may be fairly fixed; 
but their expression in methods and ideals is affected by changing 
physical and social environments. 

The human factor in our interdependent society of today is 
looming large. Without proper treatment of workers, efficiency 
and profits tend to drop. The business which overlooks the in¬ 
terests of consumers is in danger. In the words of a well-known 
industrial engineer, “the firm which looks only to profits is likely 
to fail.” Human engineering, if successful, will benefit workers 
and consumers as well as investors and managers. Social and in¬ 
dustrial psychology attempts to find ways of definitely and con- 


PURPOSE IN INDUSTRY 


3ii 

sciously directing human efforts toward the betterment of society. 
Is it possible to develop a program which will cause the pursuit of 
private wealth, income, and profits to aid in the development of 
national and social well-being? Can a national policy finally be 
worked out “respecting profits, credit, taxation, and wages which 
shall induce capitalists, through their self-interest, continuously to 
promote the production of wealth and the happiness of mankind 
and at no time to restrict or stop production? ” 1 It must be 
sorrowfully said in the face of the recent depression that we have 
not accomplished much along this line to date. 

REFERENCES 

Filene, A. L., A Merchant’s Horizon 
Tawney, R. H., The Acquisitive Society, Chap. 7 
Tead, O., Human Nature and Management, Chaps. 10 and n 
Bulletin of the Taylor Society, April, 1930; Feb., 1931; April, 1931; 
Oct., 1931 

1 Commons, J. R., American Economic Review, Sup., March, 1923, p. 115. 


CHAPTER XIX 


STABILIZATION OF EMPLOYMENT 

WHAT IS UNEMPLOYMENT? 

Unemployment is not purely a labor problem. With improved 
methods of food production and a slowing down of the growth of 
population, it may be anticipated that a considerable fraction of the 
land area of the United States will be returned to forests and wild 
game. It will not be needed in agriculture. In times of depression 
there are unemployed land and capital as well as an unemployed 
labor force. Empty buildings and idle machines go hand in hand 
with unemployed workers and bread lines. Maladjustments be¬ 
cause of modified tastes and the eccentricities of fashion affect both 
capital and labor. To the average wage earner the irregularity of 
employment furnishes an ever-present source of anxiety. Unem¬ 
ployment is one of the important causes of poverty and of lack of 
thrift and foresight on the part of the wage-earning population. 
Periods of idleness are often demoralizing to the individual, and 
increase the amount of debauchery, crime, and industrial in¬ 
efficiency. Casual and irregular employment is almost universally 
recognized by students of practical sociology “to involve deteriora¬ 
tion in both the physique and character of those engaged in it.” 

The human race has been nurtured in ages of scarcity. Until a 
generation or more ago the people of the entire world constantly 
faced the danger of famine and under-production. Suddenly 
science, invention, the machine, and power ushered the people 
of the western world into an epoch in which over-production is 
feared. Industry after industry is geared to make more production 
than the rank and file have purchasing power to buy. A new 
situation in the industrial and economic world confronts this 
generation. It cannot be met by thinking along the familiar lines 
of individualism, of laissez faire-ism, of the necessity for frugality, 
and of the saving of more and more capital goods. 

The heart of the problem today lies in consumption and increas- 

312 


STABILIZATION OF EMPLOYMENT 


313 


ing leisure rather than in production and in the amassing of more 
and more equipment for further production. It is true that further 
progress in invention and scientific achievement is of great import; 
but the prime problem is to find purchasers for the output of in¬ 
dustrial enterprises. Or, in other words, how may employment be 
found accompanied by a rising wage scale, and what may the 
government do in furnishing the community services such as 
education, recreation, assurance against unemployment, old age, 
and ill health ? 

A worker is unemployed when he is able to work and is seeking 
a job “but is unable to find any suited to his capacity, under condi¬ 
tions which are reasonable, judged by local standards.” Other 
groups approximate this normal body of the unemployed: (1) the 
temperamental man who is hard to get along with, and who is 
frequently out of a job because of his unattractive personality; 
(2) the drifters — migratory workers or hoboes; (3) the odd jobbers 
who stay in one locality, who shovel snow, ashes, or coal, who clean 
up yards, who work occasionally at temporary common labor. 
These three groups of subnormal wage earners are often out of work; 
but the problems involved are different from those connected with 
the normal unemployed person, as defined above. There are also 
large groups of unemployables — the sick, the defective, the young, 
the old, the tramp who aims to avoid work, and the criminal. 
Lastly, the idle rich may be counted as a part of the great army 
of non-workers. In this discussion of unemployment we are only 
concerned with the normal unemployed group. 

Unemployment and vacation must first be differentiated. Vaca¬ 
tion is a cessation from labor for the sake of rest and recuperation. 
Unemployment is caused by inability to work or to obtain em¬ 
ployment. In certain border cases it is difficult to distinguish 
between a case of unemployment and of vacation. The building 
trades experience periods of slack work during the winter season. 
Since high wages are maintained in these trades, this period of 
idleness may be said to approximate in character a vacation. In 
the clothing industry the slack season, on the other hand, may be 
termed one of unemployment. 


3i4 


LABOR PROBLEMS 


STATISTICS OF UNEMPLOYMENT AND OF IRREGULARITY 
OF EMPLOYMENT 

Unemployment is an ever-present phenomenon; but the amount 
varies greatly from month to month with seasonal variations and 
from year to year with cyclical changes. Reliable statistics in 
regard to unemployment in the United States are not abundant, 
and an ambitious attempt to provide unemployment statistics over 
a period of thirty years has been made by Professor Paul H. 
Douglas. 1 His estimates are based upon Census and Interstate 
Commerce Commission figures of employment and of population, 
interpolated for the years in which no reports have been made. 
The period covered is 1897-1926, and the industries studied are 
manufacturing, railway transportation, the building trades, and 
mining. The estimated percentage of unemployment for the open¬ 
ing year, 1897, is 18.0; and for the closing year, 1926, it is 7.5. The 
lowest percentage, 5.5, is found in 1918; and the highest, 23.1, in 
1921. The average percentage of unemployment for the thirty- 
year period is estimated to be 10.2. The figures of Douglas, how¬ 
ever, include those persons not working because of sickness and 
disability. It is probable that nearly one per cent of the total was 
due to these causes. The percentage of real unemployment may 
therefore be calculated as at least nine. Since these four lines of 
activity are doubtless more subject to seasonal and cyclical changes 
than many others, it may be assumed that the average percentage 
of unemployment in the United States during the period 1897-1926 
was less than nine — perhaps seven to eight. In those four in¬ 
dustries, the minimum percentage of unemployment (not including 
that caused by sickness, etc.) was approximately five. This appears 
to be the measure of chronic unemployment. Professor Douglas 
finds no clear indication during this period of thirty years that the 
relative volume of unemployment is increasing or decreasing. 
According to another investigator, the average number of unem¬ 
ployed, exclusive of farm laborers, was nearly ten per cent of the 
employable group, in the period 1902-1917. 2 

The Bureau of Labor Statistics estimates the trend of employ¬ 
ment in manufacturing industries as follows: — 

1 Douglas, P. H., and Director, A., The Problem of Unemployment, Chap. 2. 

2 See Patterson, Social Aspects of Industry, p. 283. 


STABILIZATION OF EMPLOYMENT 


315 


1926 — 100 1930 — 83.7 

1927— 96.4 1931 —70.9 

1928 — 93.8 1932 — . . . 

1929— 97.5 

The census of 1930 gathered statistics of unemployment in April 
of that year. The following table presents the important items: — 

Class 

A. Persons out of a job, able to work, and 

looking for a job. 

B. Persons having jobs but on lay-off with¬ 

out pay, excluding those sick or volun¬ 
tarily idle. 

C. Persons out of a job and unable to work 

D. Persons having jobs but idle on account 

of sickness or disability. 

E. Persons out of a job and not looking for 

work. 

F. Persons having jobs but voluntarily idle, 

without pay. 

G. Persons having jobs and drawing pay, 

though not at work (on vacation, etc.) 

The first two classes cover the persons who may be placed in the 
employed class as it has been defined in this chapter. The total 
number of unemployed in April, 1930, was 3,287,647, or 6.6 per 
cent of the gainfully employed. These figures were criticized and 
the Bureau of Census undertook a special unemployment census in 
19 large cities in the latter part of January, 1931. As a result, the 
number of unemployed in the nation was estimated to be approxi¬ 
mately 6,000,000 in January, 1931, or one in every eight of the 
“gainfully employed” was actually jobless. 

There is much seasonal as well as cyclical unemployment. It 
has been estimated that nearly 400,000 workers in American in¬ 
dustries “must annually face a period of unemployment of greater 
or less extent owing to seasonal factors.” 1 The Report on Waste in 
Industry of the Federated American Engineering Societies esti¬ 
mated that the clothing workers were idle about 31 per cent of 
their annual working time; shoe workers, 25 per cent; and the 
1 Smith, E. S., Reducing Seasonal Unemployment, p. 9. 


Percent of 
Gainful Workers 


2,429,062 

5 -o 

758,585 

172,661 

1.6 

273,588 


87,988 


84,595 


82,335 








LABOR PROBLEMS 


3 j 6 

building trades workers, 37 per cent. The bituminous coal industry 
is notorious for its irregularity. The miners are estimated to lose, 
due to seasonal and cyclical changes, about 93 working days an¬ 
nually. In 1925, it was estimated that the typical American wage 
worker lost 60 days because of unemployment each year — 30 be¬ 
cause of no work and 30 because of part-time work. 1 The full 
significance of these and other cold figures of unemployment and of 
irregularity of employment cannot be understood until the reader is 
able to translate them into terms of the disturbance to home life 
and of the effects upon human weal and woe. An attempt should 
be made to visualize the individual and social demoralization, the 
lowered morale, the decreased efficiency, and the social waste con¬ 
sequent upon the jerky method of operating our business mechanism 
which is unfortunately so characteristic of American industry. 
Unemployment and irregularity of employment and the fear of 
unemployment are important factors in producing the feeling of 
insecurity which haunts many a family in the wage earning and 
salary group. 


THE RIGHT TO A JOB 

Does an individual have a right to a job? Does the right to 
live and to have liberty imply the right to have an opportunity to 
earn a living? Even if the individual is denied such rights as an 
individual, the right to a job is entitled to a hearing on the ground 
of social expediency. Particularly is this true in a country favored 
with a democratic form of government and an efficient industrial 
system. After a period of probation, a wage earner should be 
assured of a fairly permanent job so long as he is efficient. Interest 
is paid on borrowed capital regularly whether the capital goods are 
or are not used. Do not workers have an excellent reason for 
demanding security of a job so long as the business is solvent? 
Business enterprises may fairly be asked to give their employees a 
“permanent industrial home” accompanied by a regular wage in¬ 
come. If the legal right to work were recognized, involuntary 
poverty would in a large measure disappear. Under a primitive 
economy, when conditions were normal, demand was always ac¬ 
companied by an opportunity to make a direct effort to obtain 
satisfaction. Our present complex economic system gives this 
1 Forsberg, A. B., The Master Builder , July, 1925. 


STABILIZATION OF EMPLOYMENT 


317 


privilege to only a fraction of the community. In order to satisfy 
wants, the majority must obtain work from some other individual, 
that is, from an employer. An individual, in order to satisfy his 
wants, must find an employer who is willing to give him a job. 
Surely the conservation of the rights to life, liberty, and the 
pursuit of happiness is difficult unless the right to have an oppor¬ 
tunity to earn a living is conceded. The practical difficulties to be 
overcome in successfully carrying out a policy guaranteeing to 
every able-bodied worker an opportunity to earn the minimum 
amount necessary for subsistence are many; but the problem of 
supplying either work opportunities to those who are able and 
willing to work or an amount of relief or unemployment insurance 
sufficient to maintain the family at a level somewhat above that 
of subsistence, is being forced upon the community in this age of 
great productive capacity. The responsibility for work opportuni¬ 
ties or for maintenance should be divided between industry and 
governmental units. 

CAUSES OF UNEMPLOYMENT 

Unemployment is not a decree of fate. It is a price for industrial 
and economic progress which it is not necessary to pay. Unemploy¬ 
ment is due to human blunders. It is caused by bad management, 
by the lack of business ability, and by the absence of consideration 
for the workers. Lack of industrial coordination is doubtless 
another reason for unemployment. Unemployment is the master 
test of defectiveness in our industrial order. It is a sure indication 
of important social and economic maladjustments. Unemployment 
may be called a social ill or disease. Industrial health can be 
achieved only by taking positive scientific measures. The type 
of brain power which has multiplied the productive capacity of the 
nation many times, that has greatly reduced the mortality from 
smallpox, typhoid fever, and tuberculosis, can find a way if it is 
actually directed toward this problem of bringing about a state of 
steady employment. 

Many classifications of the causes of unemployment have been 
devised. For present purposes, the causes of unemployment may 
be grouped under the following general headings: — 

Personal 

Seasonal and style changes 


LABOR PROBLEMS 


318 


Maladjustments and cyclical changes 
Excessive profits and savings 
Over-expansion of certain industries 
Changes in domestic and foreign trade 
Changes in the money and credit situation 
Technological Changes 

Introduction of new machinery 
New methods of management 
Mergers 

Personal causes of unemployment play little part in the case of 
those who are able and willing to work but unable to find suitable 
employment. Many persons are unemployed because of sundry 
personal reasons such as youth, old age, sickness, accident, mental 
disability, temperamental peculiarities, intemperance, degeneracy, 
ignorance, and lack of adaptability or mobility. Changes in the 
season and in weather conditions affect the employment of various 
classes of wage workers such as sailors, farm laborers, workers in 
the building trades, maintenance of way men on the railway, con¬ 
struction gangs on the railways, canals, reservoirs, and the like. 
Workers in the clothing industry are affected by changes and de¬ 
mand due to weather conditions and to modifications in the fashion. 

During a period of prosperity, while the swing of the business cycle 
is upward, profits, dividends, and the value of products increase faster 
than wages. The profits of the United States Steel Corporation 
increased from approximately $88,000,000 in 1927 to $197,500,000 
in 1929. The profits of 1,509 corporations increased 39.3 per cent 
during the same period. Profits increase faster than dividends and 
the consequent growth in corporation surplus was utilized in a 
majority of cases to increase the capital equipment. The wages 
in all manufacturing industries increased from $10,848,800,000 in 
1927 to $11,421,600,000 in 1929; but the value of manufactured 
products increased from $62,718,000,000 to $69,417,500,000. While 
the purchasing power of the wage workers in manufacturing enter¬ 
prises increased less than $600,000,000, the value of the product 
increased by $6,700,000,000. The increase in productive power 
outran the increase in the purchasing power of the wage workers 
in the ratio of approximately n to 1. A large fraction of the 
profits of industry during a period of so-called prosperity is shunted 
back into the industry in the form of additions to the capital 


STABILIZATION OF EMPLOYMENT 


319 


equipment. The wage workers and other small income receivers 
do not obtain enough to buy what is being produced. Too much of 
income is saved, that is, spent for capital goods, and not enough 
is used for consumption goods. The masses do not receive enough 
to buy the products of large-scale and mass production. Productive 
capacity and consumption do not balance; “profits destroy pros¬ 
perity”; and “the menace of over-production” is clearly discerned. 
The productive mechanism is clogged with a plethora of goods not 
balanced by purchasing power. Factories close, unemployment 
mounts, and a depression spreads its evils over the nation. 1 

In a period of expansion and of good times, many businesses 
over-expand. They are prepared to produce more goods than there 
is a demand for at a price which is profitable. Examples of serious 
over-expansion in American industries are found in farming, coal 
mining, the iron and steel industry. Presently the plants in the 
over-expanded industry begin to curtail output and to run on part- 
time or with a portion of the equipment idle. Changes in demand 
often cause maladjustments. New types of commodities are de¬ 
manded, and old plants are found to be useless or out-of-date. 
Fluctuations in foreign trade may likewise play havoc with business 
plans and equipment. A new tariff wall, a war, or a new source of 
supply may cause one or more foreign countries to demand more 
or less of a country’s output. During the World War, American 
wheat found a considerable market abroad. With the coming of 
peace and the return of Europe to more normal pursuits, the foreign 
demand was somewhat curtailed, and some reduction in the home 
demand was also experienced. The farmers were prepared to 
produce more wheat than was demanded at home and abroad at a 
profitable price. When a country changes from the type of inter¬ 
national trade in which there is an excess of exports over imports to 
the reverse, due to the payment of international debts and the 
interest upon the same, or of reparations, it almost inevitably 
experiences maladjustments which cause dislocation in industry 
and unemployment. Maladjustments are many. It is difficult to 
maintain an equilibrium even when attempts are made to get at 
the statistics of supply and demand; maladjustments are inevita- 

1 Hayes, G., The New Republic, Jan. 3, 1931; Frey, J. P., Monthly Labor 
Review, March, 1931, p. 68; The Survey, Jan. 1, 1932, pp. 347-348; Hamlin, S., 
The Menace of Over-Production . 


3 2 ° 


LABOR PROBLEMS 


ble when industry goes ahead blindly. Progress or change causes 
maladjustments. The practical problem is to reduce the pains 
growing out of maladjustment to a minimum. There is no normal 
or long-time equilibrium. 

Changes in the value of the circulating medium or in the use of 
credit may lead to conditions which cause a slowing up of business 
and unemployment. During periods of falling prices business is 
likely to be hesitant. The prices of certain commodities and serv¬ 
ices are likely to be maintained with little change — governmental 
charges, rents, professional fees, the rates charged by public 
utilities, bond interest, etc. During a period in which gold is 
becoming more valuable relatively, or credit is more difficult to 
obtain, a large number of pegged prices will cause the prices of 
many uncontrolled articles to drop abnormally. Professor Slichter 
estimated in 1931 that the government fixes the price of goods and 
services valued at about $13,000,000,000 per year — including 
railway rates. Prices of these goods and services do not fall rapidly 
in a time of falling prices. And the same is true of many other 
commodities. There is a considerable lag. Commodities which 
are not regulated or controlled are pushed down rapidly. Serious 
maladjustments result. 

The introduction of a new “labor saving” device or machine 
displaces many individual workers; and it frequently destroys the 
importance of a trade. The introduction of machinery reduced, for 
example, the value of the shoemakers’ trade. The invention of 
the linotype affected the printers’ trade. It is not easy for 
the men who have worked for years in one trade to adjust 
themselves to new conditions when the demand for their skill 
is suddenly destroyed by the invention of a machine which does 
the work formerly required of them. Eventually the demand 
for workers may be increased as the result of introduction of 
machinery; but immediately many individuals lose good jobs be¬ 
cause the machine is ready to do their work. They are thrown out 
of employment, or they are obliged to accept an inferior job at 
lower wages. For a time, in the “short run,” many wage earners 
are undoubtedly adversely affected as a result of the introduction of 
machinery. It is not comforting to tell the man who is jobless, or 
whose income is reduced so that his standard of living must be 
lowered, or whose wife and children must become wage earners, 


STABILIZATION OF EMPLOYMENT 


321 


that in the “long run” and for the great mass of workers these 
“newfangled” machines will be beneficial. Perhaps for him there 
will be no long run. A profound philosophy of world progress and 
of human betterment does not appeal to the man with a family 
dependent upon his daily earnings when he faces the prospect of 
having his skill and training rendered unmarketable. 

The displacement of workers by the invention and introduction 
of labor-saving devices is as old as the Industrial Revolution. 
Year after year, machines and factories have multiplied. Workers 
have been displaced; but it has been complacently assumed that 
they would soon find other jobs. The total number of factory em¬ 
ployees increased decade after decade. Since the World War, 
however, certain significant changes have occurred. While the 
productivity of our factories continues to increase, the number of 
workers employed is no longer on the up-grade. Similar conditions 
prevail in steam transportation, farming, and mining. Technologi¬ 
cal changes have been coming so rapidly that the Iron Man is 
actually reducing the total number of flesh-and-blood men in major 
industries. Mergers have also been causing much displacement 
in the white-collar group. Certain investigations into the ex¬ 
periences of the displaced workers indicate a serious lag even in 
normal times between jobs; and the new job, if obtained, is fre¬ 
quently inferior to the old one. 

Labor saving machines and improved management methods may 
save labor only to waste it. The problems introduced by the rapid 
improvement of machines and methods center around the develop¬ 
ment of new lines of endeavor, the re-training of workers for other 
jobs, and the readjusting of them into new positions. Can op¬ 
portunities be found for these workers which will enable them to 
produce commodities and services which are desirable, and which 
will make it possible for these workers to receive adequate wages 
steadily? Can new frontiers or safety valves be found which will 
enable us to cope with the complexities of the maturity of the 
machine age, which will reduce to a minimum the friction of re¬ 
adjustments to new methods of production? Can increased pro¬ 
ductivity due to improved machines and better management meth¬ 
ods be made to pay the cost of training and readjusting displaced 
workers? Technological changes are likely to increase rather than 
decrease in the future; consequently industry and society may 


322 


LABOR PROBLEMS 


expect to be called upon to take a large portion of the burden of 
such changes off the shoulders of the disemployed worker. Place¬ 
ment elsewhere, re-training when desirable, unemployment insur¬ 
ance, and old age pensions are items in a program of easing the 
thrust of progress in technology and in invention. 

The combined effect of excessive profits, unbalanced expansion, 
and technological displacements may also be approached from a 
somewhat different angle. As improvements in machines and proc¬ 
esses have been made, two disquieting results become manifest, 
(i) Workers have been displaced and profits increased. In turn, 
these profits were used to obtain more machines or were shunted 
from purchases of consumers’ goods to capital. At the same time, 
the total consumer’s demand was reduced by technological un¬ 
employment. Or (2), prices were reduced to the consumer. 
Because of competition between producers, the weaker producers 
were hard hit; the latter proceeded to reduce wages. Gradually 
wage reductions worked up to the stronger competitors. Again 
purchasing power was reduced. However, reduction in prices 
benefited those having fixed or nearly fixed monetary incomes. 
But some of this reduction in cost of living was doubtless saved, 
and in consequence added more to the total output of capital goods. 1 


HOW MAY UNEMPLOYMENT BE REDUCED? 

When considerable numbers of men who are able and willing 
to work in order to support themselves and families are unable to 
find employment, a condition of maladjustment exists in the in¬ 
dustrial mechanism which is of serious import to all members of 
the community and of the nation. The prevention of unemploy¬ 
ment in the case of the normal individual is one of the vital social 
and economic problems of modern times. In this book, solutions 
of the problems of unemployment will be sought within the limits of 
the capitalistic order. The Communists and the Socialists declare 
that capitalism is bankrupt. From their point of view the only 
solutions to the unemployment problem lie in the overthrow of 
capitalism and the establishment of a new order of things. The 
single tax advocates are certain that the elimination of the private 
receipt of land rent will open economic opportunity to all; they 
1 Losely, H. P., Factory and Industrial Management , March, 1932, p. 120. 


STABILIZATION OF EMPLOYMENT 


323 


would not, however, overturn the capitalistic regime. Attempts 
to find a way out within the limits of the present order will lead to 
careful consideration of educational programs, taxation, currency 
and credit, property rights, ownership of land and natural re¬ 
sources, restriction of immigration, management methods, the 
functions of government, and the development of plans for the 
efficient organization and utilization of the resources of the nation 
or of the world considered as a unit. 

As a preliminary requirement, accurate, complete, and up-to- 
date statistics of employment and unemployment should be 
gathered by the federal government. Programs for the reduction 
or alleviation of the evils of unemployment are of two general 
types: ( a ) finding work for the unemployed, or ( b ) providing in¬ 
come for the workless by means of unemployment insurance, a 
pension, or charity. Several of these proposals will be briefly 
considered. 

(1) The amount of idleness because of sickness and ill-health 
has been reduced and may be further reduced by legislation in 
regard to sanitary conditions in workshops, factories, and dwelling 
houses, and by the education of the general public in regard to the 
danger to the individual of a lack of proper ventilation, of careless¬ 
ness in the disposal of wastes, of a badly selected diet, of improp¬ 
erly prepared food, and so on through a long list. The introduction 
of domestic science into the public schools is a step in the right 
direction. The amount of debauchery and ill-health and, there¬ 
fore, of idleness, is increased because the ordinary rules of right 
living in regard to diet, fresh air, and disposal of wastes are not 
followed. Under modern conditions these matters are as much 
social as individual. The sanitary conditions of the factory in 
which the wage earner works and of the tenement in which he and 
his family live, and the purity of the food they eat and the milk 
and water they drink are in no small measure beyond the control 
of the individual most directly concerned. It has been estimated 
that the average individual in the United States is seriously ill 
thirteen days in each and every year; the census of 1930 found 
273,588 “persons having jobs but idle on account of sickness and 
disability.” 

(2) The reduction of rapid and senseless changes in demand at 
the behest of fashion would eliminate much of the irregularity in 


324 


LABOR PROBLEMS 


certain industries. A campaign of education, however, would face 
almost insurmountable obstacles. 

(3) The general introduction of industrial education into the 
public schools will increase the skill and mobility of future wage 
earners, thus enabling them to shift more readily from one occupa¬ 
tion to another. The adaptable man is needed. This desired end 
might be partially accomplished by teaching each individual two 
allied trades. The “double-barreled man” will have two chances to 
get a job to one on the part of the man with one trade; and the 
former will be able more readily to adapt himself to changes in 
industrial conditions. A program of re-education of the displaced 
workers should be carried out. A period of unemployment is 
usually one in which the out-of-work deteriorate. Can it be made 
a period of re-training, of better training, or of broader education? 
Here the public school system with a new vision of adult education 
may take on added functions. The traditional courses and methods 
must doubtless be discarded or radically modified in this new field. 
Of course, adult education or a re-training program for the out- 
of-work will not go far toward solving the unemployment problem 
but it might under sympathetic and wise guidance do much to 
bolster up the morale and preserve the stamina of the displaced. 
Instead of being a total loss, a period of unemployment might be 
used to register certain individual and social gains. The drab 
period of unemployment might become something better than 
“poisoned leisure.” 

(4) Unemployment and under-employment are no longer con¬ 
sidered merely as problems to be assigned for solution to students of 
philanthropy. Unemployment and irregular employment are being 
recognized as important problems in industrial management. Con¬ 
sequently, emphasis is being placed upon the establishment of a 
well-organized and widespread system of employment agencies and 
upon the work of employment managers in industrial plants. The 
abnormal war problems and the reduction of the stream of immi¬ 
grants during and since the World War have doubtless hastened 
the acceptance of this point of view. In times when considerable 
groups of the unemployed gathered each morning outside the 
factory gate, before the expense of hiring and training new workers 
to replace those let out was recognized by employers, and before 
cost accounting was deemed necessary or even desirable, the prob- 


STABILIZATION OF EMPLOYMENT 


32$ 

lem of stabilizing industry and of reducing labor was not judged 
to be one which business need tackle. Until recently, the problems 
of unemployment have been largely left in the hands of social 
workers; but today the hard-headed business man is beginning to 
understand that the study of employment and unemployment 
problems is an integral part of the program of industrial manage¬ 
ment. If the analysis made in this volume of scientific management, 
of the human element in industry, and of employee representation, 
be fairly accurate, it is not unreasonable to anticipate, in business 
circles, continued keen interest in the matter of unemployment. 

In the past, employers as well as unemployed wage earners were 
often ignorant of the conditions of the labor market. Efficient 
employment agencies aid in bringing together the employer looking 
for workers, and the worker looking for a job. The employment 
agency obviously cannot create opportunities for employment; 
but it can aid in getting the unemployed jobs when vacancies 
exist. The method of going aimlessly from shop to shop and from 
town to town seeking a job is wasteful, disheartening, and fre¬ 
quently degrading and demoralizing; and it often provides a 
favorable opportunity for the employer to nibble at the wage scale. 
It is unsystematic and should be replaced by efficient employment 
bureaus which gather statistics and information as to the demand 
and supply of workers in different trades and in different sections 
of the country. A model employment agency should reduce mal¬ 
adjustment. Iron and steel, wheat, wool, stocks and bonds — all 
have known market places; but the demand and supply of labor 
continues to be equated by the pack-pedler method. These well- 
known commodities may be classified; but labor power is not 
standardized. Each worker is a special case. The task of develop¬ 
ing an efficient organization for selling labor power is difficult. 
However, a model employment bureau should relieve an employing 
concern of the necessity of interviewing many applicants who are 
found to be unsuited for the work. The public employment agency 
should do the preliminary interviewing and classifying of applicants 
for jobs. The typical employment bureau is not a good sales 
agency; the manager does not “know its merchandise.” Employ¬ 
ers distrust the employment agency because its recommendations 
are too frequently based upon insufficient knowledge of the quali¬ 
fications and the record of the person recommended. Not in- 


LABOR PROBLEMS 


326 

frequently, public agencies are looked upon as philanthropic 
instead of business institutions. One writer asserts that the public 
agency “suffers from democracy, and it lacks imagination.” In 
too many instances, no classification is made of applicants. All, 
skilled and unskilled, are herded together in one unattractive wait¬ 
ing room, and interviewed by the same official. An employment 
bureau should aid the young worker in the selection of a suitable 
vocation. The personal characteristics of the applicant and the 
opportunities in a given occupation should be given careful con¬ 
sideration. 

Employment agencies are of two general types — private and 
public. These in turn may be subdivided. Private agencies are 
of at least four kinds: fee-charging, operated for philanthropic 
reasons, conducted by associations of employers, and conducted 
by labor organizations. Public agencies are municipal, state, or 
federal, or some combination of the three types. The evils of the 
private fee-charging agency are many. Private fee-charging agen¬ 
cies are primarily interested in filling vacancies. Their managers 
are not interested in reducing the amount of unemployment or in 
the upbuilding of a stable labor force. They find a large labor 
turnover desirable. The federal Commission on Industrial Rela¬ 
tions found that the private employment agency “business as a 
whole reeks with fraud, extortion, and flagrant abuses of every 
kind.” In 1930 it was estimated that there were at least 2,000 
fee-charging private agencies in the four important industrial states 
of New York, Pennsylvania, Illinois, and Ohio. Over forty states 
have passed laws regulating the fee-charging private agencies, but 
the laws have failed adequately to check abuses. Two states, 
Idaho and Washington, attempted to prohibit by law the collection 
of fees by employment agencies for placing workers. The Wash¬ 
ington Act was declared unconstitutional in 1917 by the federal 
Supreme Court. The decision was favored by only five of the nine 
judges. The majority opinion declared that the police power had 
been stretched too far. The right of an individual to follow a useful 
calling was said to be denied under this act. 

In 1927 a New Jersey statute which limited the maximum fee 
that could lawfully be charged by an employment agency, was also 
declared unconstitutional by the Supreme Court. Again, this act 
was held to place an unwarranted limitation upon the right of an 


STABILIZATION OF EMPLOYMENT 


327 


individual to operate a business. The court did not think that the 
business of conducting an employment agency was sufficiently 
“affected with public interest” to warrant a limitation of the 
charges for its services. Three judges dissented from this opinion. 
The net result of these decisions has been a definite limitation of 
the power of a state to regulate the fee-charging private employ¬ 
ment agencies. A state may, however, require such agencies to 
take out a license in order to do business, and, presumably, may 
limit the number of such licenses granted. 

The philanthropic agencies, such as those operated by charity 
societies, have been numerous. As a part of the mechanism of a 
charity society, these agencies have helped certain individuals; 
but as a factor in the development of an adequate labor market, 
they are negligible. The employers’ employment agencies are 
feared by wage workers because they may be used as a big black¬ 
listing instrumentality; and employers are inclined to look with 
suspicion upon the union agency. The legitimate purposes of such 
agencies could be performed by a well-organized system of public 
agencies. The operation of a nation-wide and efficient system of 
employment agencies is certainly as legitimately the function of the 
government as is a weather bureau or a geological survey. 

The first free state employment agencies were established in Ohio 
in 1890; but there was little demand for their services. Organized 
labor favored the opening of these offices, but employers were 
indifferent. The success of these pioneer agencies was not notable. 
The United Kingdom inaugurated a system of labor exchanges in 
February, 1910. In 1917, twenty American states had one or more 
employment offices under the partial or complete control of state 
officials. In addition, certain municipalities had established offices. 
The total number was 96. In 1930, there were 170 state and 
municipal employment agencies in 35 states. The number ranged 
from one agency in each of eleven states to seventeen in Illinois. 
The appropriations for the annual budget varied from approxi¬ 
mately $900 in Wyoming to $231,000 in Illinois. 1 State agencies 
were maintained in 23 states. 

Federal employment work began in a tentative fashion in 1907. 
The chief aim was to aid in the distribution of immigrants. The act 
establishing the Department of Labor recited that one of the pur- 
1 The Business Week , April 30, 1930. 


3 2 8 


LABOR PROBLEMS 


poses of the new Department was to be to advance “opportunities 
for profitable employment.” When the World War opened in 
August, 1914, the stream of immigration was greatly reduced and 
at the same time industry was temporarily disorganized and the 
amount of unemployment was not small. The Commissioner- 
General of Immigration decided to utilize the Immigration Service 
to gather information as to actual vacancies and to give wide 
publicity to such information. The cooperation of the Post Office 
Department was secured. After the United States became involved 
in the War, a well-knit organization was worked out. The city 
and state offices had not been united into a well-coordinated system. 
A new governmental agency, the United States Employment Serv¬ 
ice, was organized to take over the work which had been carried 
on by the Immigration Service. After the War ended, the ap¬ 
propriations for the Service were reduced, and little was done ex¬ 
cept in the placing of harvest hands in the wheat fields. From 
time to time efforts were made in Congress to pass a bill reorganiz¬ 
ing the federal employment service. In the spring of 1931, a bill 
sponsored by Senator Wagner of New York was passed by both 
Houses of Congress; but it was vetoed by President Hoover. This 
bill provided for an annual appropriation of $4,000,000 for four 
years, three-fourths of which was to be used to subsidize state 
employment agencies in the states which matched the federal 
appropriation dollar for dollar, and operated according to plans 
approved by the United States Employment Service. The re¬ 
maining fraction of the annual appropriation was to be expended 
by the federal service in providing for labor clearing houses between 
the states, for conducting offices in states which failed to establish 
a state service, and for other specified purposes. The aim of this 
bill was to develop a nation-wide coordinated employment service 
without destroying local or state control of the agencies. It was 
to provide a federal-state-municipal service. 

Granting that employment agencies for wage workers should be 
managed exclusively by governmental authority, two plans are 
feasible: the agencies may be placed under the direct control of 
the federal government, or the agencies may be placed under the 
guidance of state or local officials cooperating with federal authori¬ 
ties. The essence of the second plan is “federal-state-municipal 
cooperation, held together by federal subsidies.” The advocates 


STABILIZATION OF EMPLOYMENT 


329 


of the first plan point out that it would have the advantage of 
centralization of control with resultant economies and uniformities 
of regulations, that the personnel would be superior under federal 
control, and that job seekers would have greater confidence in a 
federal than in a decentralized system. On the other hand, it is 
argued that employment is a local problem. The prime purpose 
of an employment agency should be to place workers in local 
establishments. Managers of employment agencies, it is held, 
should have an intimate knowledge of the local situation. “The 
ideal system would seem to be one in which the control and direction 
of the service rests in the federal government, and federal funds 
bear much of the expense; but in which through a substantial con¬ 
tribution to the cost of service, and participation in the manage¬ 
ment of the service, the local viewpoint is emphasized and given 
proper weight.” 1 A joint advisory committee in each locality, 
composed of representatives of unions and of employers, may be 
desirable. 

(5) A new departure in business organization is the establish¬ 
ment of personnel or employment departments. This step signifies 
that employers are becoming convinced that the hiring and dis¬ 
charging of workers is an important part of industrial management. 
It heralds the passing of the leadership of the old-fashioned em¬ 
ployers who clung tenaciously to the “drive” policy of managing 
a factory, who insisted that their plants could be “run with proper 
discipline only when there are hungry men at the gate waiting to 
take the jobs of the unruly or too aspiring.” The rise of the shop 
committee and the installation of departments of employment man¬ 
agement are promising signs of a new era in industrial management. 2 

(6) A planned public works program should be carefully differ¬ 
entiated from the increase in construction of public works as an 
emergency program in a period of depression. The latter means 
the extraordinary use of public credit to push work on roads, on 
public buildings, and other public projects in order to obtain jobs 
directly or indirectly for the unemployed. Such an emergency 
program is likely to get tied up in red tape or to result in foolish 
and wasteful expenditures. A planned public works program is 

1 Lescohier, D. D., The Labor Market, pp. 215-216. 

2 See Chapter on Human Engineering for a discussion of the work of an 
employment department. 


330 


LABOR PROBLEMS 


intended to attack the problem of cyclical unemployment. It does 
not aim to increase the amount of federal, state, and local expendi¬ 
tures for public works of various kinds. During a period of 
prosperity the amount of public construction work should be 
reduced. Projects in which delay of a year or more will not 
seriously discommode the public would be held back. Then in a 
period of depression the amount of such work would be increased. 
The successful carrying out of this plan would change the timing 
but not the amount of public construction. It is argued that the 
top would be scraped off the business cycle and the bottom partially 
filled in. The accumulative effects of putting men to work on con¬ 
struction work and in producing the necessary materials are de¬ 
pended upon. These men would buy more and in turn stimulate 
other industries and so on through a circle of helpful events. 

In 1928 the total expenditure for public and private construc¬ 
tion work in the United States was estimated at nearly ten billion 
dollars. Of this total, over one-third was public; and of the total 
public construction expenditures about ten per cent was federal; 
however, the influence of the federal government would be some¬ 
what greater than the statistics indicated. It could set an example 
for the states and local governmental units and it might also stimu¬ 
late the states and cities through federal grants in aid. A federal 
bill providing for advanced planning of federal public works became 
a law in February, 1931. A six-year program is authorized with 
provisions “for prompt commencement and carrying out of an 
expanded program at any time.” At least three states have enacted 
advanced planning laws; and certain cities are interested in trying 
out such a program. 

Students of the problem see certain difficulties and dangers. In 
a time of prosperity, credit is usually extended too freely to private 
industry — hence over-expansion. If adherence to a planned works 
program causes the public to reduce its demands for taxes and 
credits in the time of prosperity, will not the credit flow to private 
industry and lead to further unwise expansion? Again it is asserted 
that in a period of depression, when it is difficult to obtain credit, 
the entrance of governmental units into the field in order to ob¬ 
tain the funds for the enlarged public works program will multi¬ 
ply the difficulties confronting the private business looking toward 
industrial expansion or increased output. In short, may not such 


STABILIZATION OF EMPLOYMENT 


33i 


a program increase rather than decrease the amplitude of the busi¬ 
ness cycle? This criticism seems to predicate a fairly fixed amount 
or pool of credit. If one instrumentality ceases drawing from the 
pool, more is left for others. In a time of depression, it may be 
difficult for a private individual or corporation to borrow, but the 
government with its superior credit might do so and, by starting 
certain forms of construction, increase the demand for materials, 
reduce unemployment, expand purchasing power, and make credit 
for other enterprises easy to obtain. The partial retirement of 
governmental units from the field in the time of prosperity and over¬ 
optimism does not necessarily mean that private borrowing will 
increase. Indeed such action might exercise a steadying influence 
upon the optimistic business man who borrows and the banker who 
extends credit. 

The planned public works program is only one of a series of 
articulated plans for smoothing out the business cycle; it should 
not be analyzed as an isolated program. The advocates of ad¬ 
vanced planning are prone to over-emphasize its importance in 
connection with the reduction of unemployment; but, on the other 
hand, it cannot be dismissed as impractical and futile. This pro¬ 
gram will probably be most effective when the amplitude of the 
business cycle is not excessive. Its success in the United States 
also is dependent to a considerable degree upon improved federal, 
state, and local administration. So long as purely partizan motives 
bulk large in determining the policies and programs of our ad¬ 
ministrative officials, the hope of inaugurating a well-developed 
public works program will be difficult of realization. The success 
of this and other programs for reducing unemployment and de¬ 
creasing the amplitude of the swings of the business cycle depends 
upon beginning the effort in a period of prosperity. A period of 
feverish expansion and speculation is the germination time of a 
depression. 

(7) Individual plants may do much toward the stabilization of 
employment and of plant operation. These plants are chiefly in¬ 
strumental in smoothing out seasonal irregularities. To regularize 
plant operation requires the adoption of improved managerial 
technique and the elimination of managerial indifference toward 
the evils of jerky methods of doing business. It also makes im¬ 
perative teamwork between the production and the sales depart- 


332 


LABOR PROBLEMS 


merits of the plant. The policy of the organization should be to 
sell what the firm produced instead of attempting at all times to 
produce as much as could be sold. Among the notable examples of 
fairly successful attempts at the regularization of plant operation 
are the Dennison Company, the men’s clothing industry, Henry A. 
Dix Sons Company, Hills Brothers, the Sherwin-Williams Paint 
Company, the Packard Motor Car Company, the Procter and 
Gamble Company, and the Western Electric Company. The 
experience of these companies proves that an ounce of successful 
practice is worth more than much theorizing about the stabiliza¬ 
tion of plant operation. Many executives following traditional 
methods and programs assert confidently that their business is 
different from others and consequently cannot be regularized. The 
firms mentioned above, however, represent different types of in¬ 
dustry and they have experimented with quite different methods of 
regularization. 

The important methods of achieving a high degree of regulariza¬ 
tion are four: 1 

A. Stimulate demand during the off-season. Lower prices may be 
regularly quoted during the off-season, thus stimulating demand 
when ordinarily there is very little. Skillful advertising may also 
stimulate demand during what has been an off-season. 

B. Schedule production so that employment may be distributed evenly 
throughout the year. A sales budget is estimated for a year; and 
production is spread evenly throughout that period. 

C. Side-lines and fillers are introduced. A manufacturer of women’s 
dresses makes nurses’ uniforms in the slack season. The dovetailing 
of the ice and coal businesses is well known. 

D. Use a flexible working day. A railway company and a canning 
industry have successfully used this plan instead of laying off a 
considerable number of their employees from time to time. 

Management is becoming interested in plant stabilization be¬ 
cause (i) the number of new men needed and the cost of breaking 
in new employees are reduced; (2) employees work more efficiently 
and there is less restriction of output when they are not afraid of 
working themselves out of a job; (3) machines and factory build¬ 
ings can be used more economically; (4) the purchasing power of 

1 Report of the Commission on Stabilization of Industry for the Prevention of 
Unemployment. New York, 1930. 


STABILIZATION OF EMPLOYMENT 


333 


wage workers is protected and stabilized; (5) the employment 
problem will be partially solved by regularization; and (6) a 
regular job may allow a reduction in the wage rate per hour. 

It should be pointed out that stabilization would not necessarily 
end unemployment. This program might reduce the amount of 
unemployment and at the same time increase the duration of the 
average period of unemployment of displaced individuals. It 
might be more difficult for a man out of a job to obtain work. 
Conceivably, stabilization might increase the dependency of work¬ 
ers upon their employers, because of the difficulties of obtaining 
new jobs. With increasing stabilization of industry, it may be 
anticipated, would come a feeling that the job is valuable and should 
be kept. 

(7) Economic planning, rationalization, or scientific manage¬ 
ment broadened in scope so as to apply to the industries of the 
nation and ultimately of the world, gives promise of evolving a 
basic method of reducing unemployment and of giving security to 
the workers while retaining the characteristic features of the present 
industrial and economic order. 1 

(8) Unemployment insurance is not a direct method of reducing 
the amount of unemployment. It is a negative rather than a posi¬ 
tive remedy which should be used when others fail. An adequate 
system of unemployment insurance should serve two purposes: 

(a) alleviate the suffering and reduce economic insecurity con¬ 
sequent upon unemployment and irregularity of employment; 

(b) furnish a potent incentive to adopt industrial programs which 
will reduce labor turnover and eliminate the jerky way of conduct¬ 
ing business enterprises. 2 


REFERENCES 

Beveridge, W. H., Unemployment 

Bielschowsky, G., “Business Fluctuations and Public Works,” 
Quarterly Journal of Economics , Feb., 1930 
Calkins, C., Some Folks Won’t Work 

Dickinson, F. G., “Public Construction and Cyclical Unemployment,” 
Annals of the American Academy of Political and Social Science , Sept., 
1928, Supplement; ibid., July, 1932, pp. 141-147 

1 Discussed in Chaps. 1 and 2. 

2 See Chapter on Social Insurance. 


334 


LABOR PROBLEMS 


Douglas, P. H., and Director, A., The Problem of Unemployment 

Edie, L. D., The Stabilization of Business 

Ely, R. T., Hard Times 

Feldman, H., Regularization of Employment 

Foster, W. T., and Catchings, W., The Road to Plenty 

Hamlin, S., The Menace of Over-Production 

Harrison, S. M., Public Employment Agencies 

Hobson, J. A., Rationalization and Unemployment 

Lewisohn, S., Can Business Prevent Unemployment? 

Meriam, R. S., “Unemployment: Literature and Problems ” Quarterly 
Journal of Economics, Nov., 1931 

Mund, V. A., “Prosperity Reserves of Public Works,” Annals of the 
American Academy of Political and Social Science, May, 1930, Supple¬ 
ment 

Seymour, J. B., British Labor Exchanges 
Smith, E. S., Reducing Seasonal Unemployment 
The American Labor Legislation Review 

“Insecurity of Industry,” Annals of the American Academy of Political 
and Social Science, March, 1931 

Business Cycles and Unemployment, National Bureau of Economic Re¬ 
search 

Planning and Control of Public Works, National Bureau of Economic 
Research 

Report of Committee on Stabilization of Industry, to Gov. Roosevelt of 
New York, Nov., 1930 

The Survey, April 1, 1929; April 1, 1930; Dec. 1, 1930; March 1, 1932 


CHAPTER XX 


WOMEN AND CHILDREN IN INDUSTRY 

THE CHILD LABOR PROBLEM 

The child labor problem is only a part of the more inclusive boy 
and girl problem which has been thrust upon an unprepared nation 
by modern industry and city life. To the wage earner, child labor 
appears to be a form of subsidized labor. The dangers involved 
seem to be similar to those connected with the immigration of low- 
standard-of-living workers, with woman labor, and with convict 
labor. Child labor is not a new phenomenon, nor is it in essence 
an evil. The environmental conditions surrounding the modern 
child wage earner, the kind of work which he must perform, the 
regularity and routine incidental to its performance, and the com¬ 
petition between the child and the adult workers are elements 
which make child labor in factories, stores, and mines at the 
present time an evil and a menace to the race, to the nation, and 
to organized labor. For the boy and girl of ten to sixteen years of 
age, some opportunity to perform useful work — productive ac¬ 
tivity — is a valuable, almost an essential, part of his or her 
experience and training. On the other hand, long-continued, 
routine work, performed under unfavorable conditions is deadening, 
and inevitably causes physical, mental, and moral weakness. 

The chores of the typical farmer boy of two or more generations 
ago, if not multiplied too freely, were excellent for the purpose of 
training and developing the youth. Work at home, before the day 
when the factory took almost all forms of industry out of the house¬ 
hold, was not an unmixed evil for the child; but a long working 
day filled with routine work in a factory or a sweat-shop environ¬ 
ment robs the child of childhood, retards the progress of the nation, 
reduces the vigor of the race, and endangers the maintenance of a 
high standard of living among adult wage earners. The advocates 
of the prohibition of child labor do not believe that idleness and 
irresponsibility are necessary or desirable for the normal develop- 

335 


336 


LABOR PROBLEMS 


ment of children. They do assert that long-continued, specialized 
labor is extremely deleterious to the child until after the period of 
adolescence is past. The child should be taught to use hand and 
eye in useful, regular, and constructive work. The mere passage 
and adequate enforcement of laws prohibiting child labor in work¬ 
shops, stores, and mines are not sufficient. 


CHILD LABOR BEFORE THE CIVIL WAR 

With the rise of the middle class in England, headed by the 
Tudors, and with the breaking of the old feudal fetters was de¬ 
veloped the idea that idleness was a sin of the darkest hue. The 
Tudors were ever crying at the English laborer: “Ye are idle, ye 
are idle; go, therefore, now and work.” The Puritan with his con¬ 
victions tinged by religious ardor held firmly and fanatically to the 
view of the Tudors. According to the Puritan, the man, woman, or 
child who was idle stood in slippery places. In studying the facts 
in regard to woman and child labor during the first half of the 
nineteenth century, the effect of this inherited puritanical idea must 
never be lost sight of. A century or more ago, to give a child work 
in the crude factory of that period was considered to be desirable. 
In a plea for the introduction of cotton mills, it was suggested that 
“here will be found a never-failing asylum for the friendless orphans 
and the bereft widows.” Today, all far-sighted men and women 
are anxious to keep the child out of the factory, store, or mine, and 
to give him a reasonable opportunity to play. 

Before the factory era, children were employed in many kinds of 
household industry and served as apprentices in certain skilled 
trades. The growth of factories called them outside the home, 
massed them together in considerable numbers, introduced greater 
regularity and specialization into their occupations, and gave more 
publicity to the evils of excessive child labor than was the case 
under the older form of household industry. When the factory 
system was in its infancy, one argument frequently used in favor 
of the introduction of factories was that the factory could utilize 
the labor of women and children who were idle. The old puritanical 
idea that idleness was a sin and a waste was effectively used to 
break down opposition to the factory system and to obtain favor¬ 
able legislation. Alexander Hamilton and other early protection- 


WOMEN AND CHILDREN IN INDUSTRY 


337 


ists declared that the factory would enable the manufacturer to 
employ child and woman workers in a more systematic and profit¬ 
able manner than they could be employed under the old system. 
As a consequence, increased production in the factories would not 
necessitate the withdrawal of the efficient adult male workers from 
agriculture, shipping, fishing, or the skilled trades. The introduc¬ 
tion of manufacture would, it was solemnly argued, “give employ¬ 
ment to a great number of persons, especially females, who now eat 
the bread of idleness.” Writers calmly estimated the additional 
product which might accrue to a given town or state if all the 
children were employed in gainful occupations. The children, they 
asserted, could obtain their schooling in night schools. A writer 
in Niles’ Register , 1 a. prominent weekly newspaper of the first half 
of last century, made a cold-blooded calculation as to the additional 
amount of wealth which might accrue to the people of the United 
States if all the children, not then employed, could be placed in 
mills and factories. It was urged that such a step would be a ben¬ 
efit, not only to manufacture, but to commerce and agriculture 
as well. This enthusiastic calculator figured that two hundred 
children from seven to sixteen years of age ought to earn $13,500 
per year. Their clothing was estimated to cost $5,000; $8,500 
would be left for boarding and educating the children. By placing 
them in factories, children would be enabled to pay for their 
maintenance, and thus one source of national waste would be 
dried up. The factory was a strange phenomenon. The men of 
the period did not and could not see the dangers involved in child 
labor in the mills; they had been taught to see the sinful side of 
leisure, and they clearly saw the opportunity to augment profits 
through the employment of children. Soon, however, the evils of 
unrestricted child labor in mills and factories became quite ap¬ 
parent, and agitation for legal restriction began. The wage earners 
and the humanitarian leaders were interested in the propaganda 
against child labor. 

The factory system originated in England, and in that country 
the treatment of woman and child wage earners was perhaps worse 
than in this country. It is unnecessary to relate the oft-repeated 
story of the treatment of the “pauper apprentices” in the cotton 
mills of England. The wrongs of the slave pale when placed in 
1 Oct. 5, 1816, Vol. 11, p. 86. 


LABOR PROBLEMS 


338 

contrast with the treatment of the child worker in Christian Eng¬ 
land of the first half of the nineteenth century. While England 
was enthusiastic over the emancipation of the Negro in the West 
Indies, her factory owners were filling their pockets with gold 
wrung from the vitality of thousands of young white children held 
in a bondage as pitiless as that of the far-away plantation owner. 
For several reasons the situation in this country never became as 
acute as in England. The factory did not appear in this country 
until after England had made some attempts at factory regulation. 
The presence of large areas of fertile and undeveloped farmland in 
the West and the absence of a large number of pauper children were 
also ameliorating factors. 

Certain writers have apparently assumed that children were 
rarely employed in factories prior to i860; but the early textile 
factories were operated chiefly by women and children. While it 
is true that the total number of children employed in gainful oc¬ 
cupations is larger in recent decades than in the second quarter of 
the nineteenth century, it is also undoubtedly true that the relative 
number thus engaged has not materially increased and has probably 
decreased. Accurate statistics are, of course, not available, but a 
study of contemporary books, pamphlets, reports, and newspapers 
leaves little doubt as to the accuracy of the conclusion just drawn. 
In 1820 over 5,000 pupils were reported to be on the rolls of the 
public schools of the city of Philadelphia. With the return of 
prosperous times the demand for child workers increased and the 
school attendance correspondingly diminished. In 1821 less than 
3,000 children were in the schools. “In 1822 the attendance was 
450 less than in 1821, and in 1823, it was less than half what it had 
been in 1820.” 1 In 1832 Seth Luther, a spokesman of the working¬ 
men, in his pamphlet The Education of Workingmen called attention 
to the evils of child labor in England. In 1825 a committee of the 
state legislature of Massachusetts investigated child labor in the 
factories of incorporated manufacturing companies. Over nine 
hundred children under sixteen years of age were reported as em¬ 
ployed in these establishments. The average length of the working 
day was twelve or thirteen hours. No investigation was made of 
child employment in unincorporated establishments. One sentence 
from this report is indicative of public opinion in 1825. “Regard 
1 McMaster, J. B., History of the American People , Vol. 5, p. 360. 


WOMEN AND CHILDREN IN INDUSTRY 


339 


is paid to the instruction of these juvenile laborers as opportunity 
permits, but some further legislative provisions may hereafter 
become necessary, that the children who are at a future day to 
become proprietors of these establishments, or at least greatly 
to influence their affairs, may not be subjected to too great devo¬ 
tion to pecuniary interest at the risk of more than an equivalent 
injury in the neglect of intellectual improvement.” 1 

In 1828 a correspondent of the National Intelligencer, a prominent 
newspaper of the time, estimated that all the machinery in the 
country required about forty thousand persons, “ principally women 
and children.” The following statistics of a cotton mill, owned by 
the Union Manufacturing Company of Maryland, were taken from 
a newspaper dated December 10,1822. This mill had four thousand 
spindles and fifty power-looms. The number of employees was 184, 
of which number 120 were “ girls,” and 58 boys between the ages 
of seven and nineteen years. Only six men were employed. “The 
girls and boys live with their parents on the ground, where there 
is now a population exceeding six hundred people, living in the 
dwellings in the factory village, for which they pay rent. There is 
a school-house under good supervision, which is also used as a 
house of worship, is well attended to by ministers of various de¬ 
nominations, and where all employed by the company have free 
access. . . . An extensive store is kept by the company, affording 
every article of provision and clothing sufficient for those employed 
in the neighborhood for many miles around.” The problems con¬ 
nected with child labor, night schools, the company store, and 
tenements were all involved in this factory of a century ago. The 
relations existing between this company and its employees must 
have been similar to those found in Pullman, in the copper country 
of northern Michigan, and elsewhere. It must not be forgotten 
that the first factory industries to develop were those which did not 
require considerable muscular development on the part of the work¬ 
ers; lightness of touch and rapidity of movement were demanded. 
The textile industries were particularly well adapted to the em¬ 
ployment of women and children. With the growth of the iron 
and steel mills, little increased demand for women and child work¬ 
ers was manifested. 

1 Documentary History of American Industrial Society, Vol. 5, p. 59. 


340 


LABOR PROBLEMS 


THE EXTENT OF CHILD LABOR IN RECENT DECADES 

Prior to 1870 no adequate statistics in regard to child labor in the 
United States are available. The census of 1870 reported that 
739,164 children between the ages of ten and fifteen years inclusive 
were engaged in gainful occupations. Of this number 114,628 were 
employed in manufacturing establishments. During the succeed¬ 
ing decade the number of child laborers increased with alarming 
rapidity. In 1880, 1,118,536 child wage earners were reported in 
all occupations. In 1900, 1,750,178 breadwinners, ten to fifteen 
years of age, were reported. Of the total, 1,264,411 were males and 
485,767 were females. The census returns made no enumeration of 
child workers under ten years of age. This number was not large, 
however, as only 8.1 per cent of the total were ten years of age. 
Of the total in all occupations, 1,061,971 or 60.2 per cent were 
engaged in “agricultural pursuits,” and 688,207 or 39*8 per cent 
were “in all other occupations.” In 1920, 1,060,858 children were 
reported as gainfully employed. Of this total, 61 per cent were in 
agricultural pursuits and 17.5 per cent in manufacturing and 
mechanical industries. The percentage of children ten to fifteen 
years of age engaged in gainful occupations was 16.8 in 1880; 
18.4 in 1910; and 8.5 in 1920. In 1930, 667,118 children were 
reported as gainful workers;, or approximately 4.7 per cent of 
population ten to fifteen years of age were listed as breadwinners. 

EARLY LEGISLATION IN ENGLAND 

During the last years of the eighteenth and the opening years of 
the nineteenth century the distinctive evils which are now recog¬ 
nized as inseparably connected with child labor in factory, mine, 
or store appeared. “The beginning of the present [nineteenth] 
century found children of five, and even of three years of age, in 
England, working in factories and brickyards; women working 
underground in mines, harnessed with mules to carts, drawing 
heavy loads; found the hours of labor whatever the avarice of 
individual mill-owners might exact, were it thirteen, or fourteen, 
or fifteen; found no guards about machinery to protect life and 
limb; found the air of the factory fouler than language can de¬ 
scribe, even could human ears bear to hear the story.” 1 Pauper 
1 Walker, F. A., Political Economy , p. 381. 


WOMEN AND CHILDREN IN INDUSTRY 


341 


children were “farmed out” to factory owners. Frightful accounts 
are given of the day and night work of children, and of the relay 
system in factory and boarding house — one gang worked while 
another slept; thus the beds in the boarding house were kept 
occupied practically all the time. 

These evil conditions soon attracted public attention. Through 
the exertions of Sir Robert Peel and other humanitarian leaders 
of the period the first child labor law was passed in 1802. The 
title gives evidence of the limitations of the act— “Health and 
Morals Act to Regulate the Labor of Bound Children in Cotton 
Factories.” It was a crude piece of legislation which only at¬ 
tempted to regulate the employment of pauper apprentices. The 
employer was required to clothe his apprentices properly; and the 
hours of labor lawfully required of the apprentice were limited to 
twelve per day. No child under nine years of age could legally 
become a “bound child.” Night work was prohibited, and the 
provisions of the law required daily instruction of the apprentice. 
The walls of factories were to be whitewashed, and the rooms 
adequately ventilated. This act is important because it was the 
first act of its kind. It was practically inoperative; but it es¬ 
tablished the principle of parliamentary interference in behalf of 
working children. As the factory system developed and towns 
sprang up around the factories, the need of pauper apprentices was 
reduced. The children of residents could readily be obtained. In 
1815 a committee was appointed by Parliament to investigate the 
conditions of working children. The testimony given before this 
committee disclosed the fact that very young children, some not 
over six years of age, were employed in factories, and that the 
length of their working day was twelve hours or more. As a result 
of this investigation the “second factory act” was passed in 1819. 
This act also only applied to cotton factories; but protection was 
extended to children who were not “pauper apprentices.” The 
act prohibited the employment of children under nine years of age, 
and limited the working day for all children between the ages of 
nine and sixteen years to twelve hours. Night work was prohibited. 
Other acts of minor importance were passed from time to time. In 
1833 after another investigating committee had reported that con¬ 
ditions were still deplorable, a more adequate statute was enacted. 
This law of 1833 applied to all textile mills. Children between the 


342 


LABOR PROBLEMS 


ages of nine and thirteen years were permitted to work only eight 
hours daily; and children between the ages of thirteen and eighteen, 
twelve hours daily. The prohibition of night work was continued. 
A certain number of holidays and half-holidays were granted, and a 
physician’s certificate of fitness for labor was required. The earlier 
laws had not provided for adequate inspection and means of en¬ 
forcing their provisions. The most important innovation in the act 
of 1833 was the provision for salaried inspectors. The inspectors 
were granted power to make rules for the execution of the law, 
and were required to prosecute violations of its provisions. In 1842 
the employment of women and of children under ten years of age 
in underground mines was prohibited. Two years later the 
“Children’s Half-Time Act” was passed. The labor of children 
under thirteen years of age was restricted to half-time. The re¬ 
maining half of the working day was to be spent in school. In 1848 
all women and all children under eighteen years of age were re¬ 
stricted to a working day of ten hours. By the middle of the 
century the right of Parliament to pass what are known as “factory 
acts” was definitely established. 


LEGISLATION IN THE UNITED STATES 

In 1836 Massachusetts enacted legislation regulating the instruc¬ 
tion of children employed in manufacturing establishments. In 
1842 the working day for children under twelve years of age was 
limited to ten hours. Ohio enacted her first child labor law in 1852, 
Illinois and Wisconsin in 1877, and Michigan in 1885. These early 
laws fixed the age limit under which no child could be employed, 
prescribed the maximum number of working hours per day or per 
week for those who might be employed, and prohibited the em¬ 
ployment of children in certain dangerous or unhealthful occupa¬ 
tions. Penalties were provided for violations; but the acts were, 
as a rule, somewhat indefinite and the provisions for enforcement 
inadequate. The real precursors of adequate child labor legislation 
were the two Massachusetts acts of 1866 and 1867. The employ¬ 
ment of children under ten years of age in manufacturing establish¬ 
ments was forbidden. Three months’ schooling each year was 
required in the case of wage-earning children ten to fifteen years of 
age. No child under fifteen years could lawfully be employed in 


WOMEN AND CHILDREN IN INDUSTRY 


343 


any manufacturing establishment for more than sixty hours per 
week. Provision was made for inspection, and annual reports were 
to be made by the inspecting officer to the governor. Penalties 
were provided for the violation of the act. 

All of the forty-eight states, the District of Columbia, Alaska, 
Hawaii, and Porto Rico have laws relating to child labor upon their 
statute books. There are practically as many different laws as 
there are different states. States like Massachusetts, New York, 
and Ohio have elaborate statutes, while several of the Southern 
states have inadequate laws which are often poorly enforced. The 
most important regulative measures in regard to the employment of 
children are the establishment of an age limit below which children 
may not lawfully be employed, limitation of the number of working 
hours per day or per week, prohibition of night work, issuance of 
working papers, compulsory education, and the administration of 
the law. The minimum age of lawful employment varies, with 
some exceptions, from twelve to fourteen years. The majority of 
the states have fixed upon fourteen years as the minimum age in 
the ordinary factory and mercantile industries. Each state usually 
classifies employments and fixes more than one minimum age. As 
a rule states fixing fourteen years as a minimum in ordinary indus¬ 
tries require each wage earner between fourteen and sixteen years 
of age to obtain a working paper or certificate certifying that the 
child has completed a required amount of schooling, and is in 
sound health and physically able to do the work required in the 
employments in which such a child may legally be employed. In 
occupations dangerous to life, limb, health, or morals the minimum 
age limit is usually placed higher. 

An excellent child labor law in one state may conceivably act as 
a check upon its industrial development. Certain industries may 
temporarily suffer in competition with those from other states 
having lax child labor laws upon their statute books. The sig¬ 
nificance of this point has undoubtedly been over-emphasized by 
the opponents of child labor legislation;, but uniformity in labor 
legislation as in regard to coinage, weights and measures, and bank¬ 
ruptcy is very desirable. National regulation would be one way of 
bringing about uniformity. The other method is the slow process 
of publicity, education, and agitation in every state in the union; 
and there is a temptation on the part of certain states to maintain 


344 


LABOR PROBLEMS 


lax child labor laws as well as lax corporation laws. The federal 
Constitution does not specifically give Congress the power directly 
to regulate or to affix minimum standards for child labor throughout 
the nation. Three methods have been proposed by means of which 
federal intervention might be provided for. In the first place, it 
was proposed to establish minimum standards for child labor in 
mines and factories in the United States through the exercise of 
control of interstate commerce. 

In 1916, Congress passed a statute forbidding the acceptance in 
interstate commerce of the products of factories employing children 
under fourteen years of age, or employing children between fourteen 
and sixteen years of age for more than eight hours a day, six days 
a week, or at night. The lower limit in the case of mining was six¬ 
teen years. This act was declared to be unconstitutional by the 
United States Supreme Court. In essence, the Court held that 
Congress was merely attempting to do by indirection that which 
it did not have power to accomplish directly. A second attempt 
was made by the federal government to control child labor. A tax 
of ten per cent was levied upon the annual net profits of a concern 
employing children. In the face of previous decisions which upheld 
the right to use the taxing power for the purpose of regulation 
rather than obtaining income, this federal act was also declared to 
be unconstitutional. Without an amendment to the federal con¬ 
stitution it seems clear that the regulation of child labor must be 
left to the states. An amendment giving Congress power “to 
limit, regulate, and prohibit” the labor of children under eighteen 
years of age has been submitted to the states; but to date only a 
few states have ratified it. There seems to be no likelihood of its 
adoption in the near future. 


OPPOSITION TO THE PROHIBITION OF CHILD LABOR 

In the face of so many obvious economic, moral, and racial dis¬ 
advantages, the continued prevalence of child labor indicates the 
existence of powerful forces favorable to its utilization. The 
disadvantages either affect society as a whole or are relatively 
remote in incidence. Child labor legislation is coercive; and com¬ 
pulsion must be used to insure enforcement. This legislation 
operates against certain powerful direct and personal economic 


WOMEN AND CHILDREN IN INDUSTRY 


345 


motives. The advantages to be derived from child labor seem 
immediate and personal, (a) The manufacturers desire to hire 
cheap labor. In the long run it may not be difficult to prove that 
“cheap” labor is “dear” labor, and in certain industries employers 
are refusing to hire children under sixteen years of age because of 
their inefficiency and carelessness; but in a large number of im¬ 
portant industries the opportunity to hire children at low wages 
helps to swell the dividends paid this year to the anxious stock¬ 
holders. ( b ) Many parents are desirous of obtaining income from 
the work of their children. The family may be in want or the head 
of the family may be indolent or avaricious. In either case the im¬ 
mediate opportunity of increasing the family income overbalances 
any fear of the possible remote injurious effects of such labor upon 
the child, (c) The child himself is anxious to earn money. He 
wishes to have money of his own to spend; and he too often sees 
little that is of practical value in the education offered by the 
public school. He asserts that there is “nothing doing” in school, 
and he craves activity. The desire for spending money today bulks 
larger than any remote and intangible disadvantageous effect upon 
the earning capacity. Many backward and stupid children leave 
school early in life because they are ashamed to stay in a class with 
children younger than themselves. 

The forces opposing child labor legislation are powerful. Coer¬ 
cive legislation is always difficult of enforcement. Scientific 
legislation — legislation which follows the route of least social 
resistance — will work along other lines. A law prohibiting child 
labor may be extremely desirable; but if the income of the family 
is so meager that proper subsistence cannot be provided for the 
members of the family, that family is imperiled, and the future of 
the children endangered. Mere coercive legislation which restrains 
children from earning wages is only a palliative; it brushes the 
surface. Indeed, sometimes it is a sedative which prevents further 
study and investigation. Questions pertaining to wages, employ¬ 
ment, sanitary home and working conditions, educational facilities, 
private property, and taxation are more fundamental. The pro¬ 
hibition of child labor in factories, stores, and mines is only one 
link in a long chain of measures making for social betterment. 

Free education and free text-books reduce the direct expenses of 
attending school, and consequently many children continue in 


346 


LABOR PROBLEMS 


school who would drop out if the parents were forced to pay for 
tuition and text-books. Paying a pension to mothers to keep 
their children in school and paying children to go to school may 
be necessary steps in this program. Such measures would di¬ 
rectly attack the child labor evil. The motives ( b ) and (c) would 
no longer act effectively to draw children out of the schoolroom and 
into the factory. Such legislation will be called paternalism; but 
the free school system is paternalistic. Paying children to go to 
school is a form of scientific child labor legislation. It removes or 
minimizes the force of two of the three powerful motives which lead 
children to become wage earners. Coercive legislation would be 
less necessary and less difficult of enforcement if children were paid 
to attend school. A minimum wage law for minors would cause 
employers of children to substitute adults for the former. This 
measure would directly affect motive (a). A decent wage for the 
head of the family will also reduce the temptation to allow the 
young children of the family to become wage workers. 


WOMAN LABOR BEFORE THE CIVIL WAR 

It is often stated and quite generally believed that the move¬ 
ment of women into industry is a new and startling phenomenon. 
Woman, however, was the first industrial worker; the primitive 
man was a hunter and a fighter. In 1789 some French women 
petitioned the king to exclude men from the trades belonging to 
women, “whether dressmaking, embroidery, or haberdashery. 
Let them leave us, at least, the needle and the spindle, and we 
will engage not to wield the compass or the square.” Miss 
Edith Abbott, after a painstaking investigation, came to the con¬ 
clusion that women are today relatively to men a less important 
factor in industrial life than they were three-quarters of a century 
ago. The statistics upon which this conclusion was based have 
been severely criticized. Nevertheless, it seems beyond controversy 
that the wives and female relatives of the head of the family in the 
wage-earning class were workers throughout the nineteenth century. 
If they did not work in household industry, they were found in the 
factories. The recent movement, which is attracting so much 
attention, is really a middle class exodus from the home. Women 
and children, as was stated in a preceding paragraph, constituted 


WOMEN AND CHILDREN IN INDUSTRY 


347 


the bulk of the workers in the first factories — textile mills — of the 
United States. “ Women formed, roughly speaking, from two- 
thirds to three-fourths, and in some districts as high as nine-tenths, 
of the total number of operatives in the first half of the century; 
but this proportion has been declining until, in the twentieth cen¬ 
tury, the men outnumber the women.” 1 The preceding quotation 
referred to cotton factories only; in the woolen industry the per¬ 
centage of women workers has undergone only a slight modifica¬ 
tion. The largest percentage is less than fifty per cent. The 
oft-quoted generalization of Harriet Martineau, that in 1836 only 
seven occupations were open to women, was probably based upon 
insufficient data. In fact, in another connection, Miss Martineau 
mentions an additional industry in which women were engaged. 

The women operatives in the early cotton mills were born in 
America; many of them were the daughters of farmers living in the 
vicinity of the mill towns. With the influx of immigration in the 
forties, the character and nationality of the women operatives 
rapidly changed. The conditions in the early factories were fre¬ 
quently pictured as far superior to those obtaining in a factory of 
the present time. As a matter of fact, the working day was long, 
the mills badly ventilated and poorly lighted, and the corporation 
boarding houses were overcrowded and insanitary. 2 A delegate 
to the first convention of the National Trades’ Union, held in 1834, 
declared the cotton factories to be “the present abode of wretched¬ 
ness, disease, and misery.” The Committee on Female Labor made 
a long report to the convention of 1836. This committee stated 
that factory work injured the health and lowered the moral stand¬ 
ards of the female employee, and that “when females are found 
capable of performing duties generally performed by men, as a 
natural consequence, from the cheapness of their habits and de¬ 
pendent situation, they acquire complete control of that particular 
branch of labor.” The committee recommended legislation pro¬ 
hibiting women “under a certain age” from working in “large 
factories.” 

1 Abbott, Edith, Journal of Political Economy , Vol. 16, p. 607. 

2 Ibid., Vol. 16, pp. 680-692; Vol. 17, pp. 19-35* 


348 


LABOR PROBLEMS 


WORK AND WAGES OF WOMEN 


According to Census Reports, 
women and girls constituted in: 

Year 

1900 

1910 

1920 

1930 


all persons gainfully employed, 

Percentage 

18.8 

23-4 

21.1 

22.1 


of 


In 1930, the total number of gainful workers was reported to be 
48,832,589. Of this total, 10,778,794 were women. Women con¬ 
stitute over one-fifth of all the gainfully employed workers in the 
United States. In the large cities, the percentage of employed 
women is larger. In addition to this number are the housewives 
engaged in keeping their own homes who are not considered as gain¬ 
fully employed. A considerable fraction, approximately one-fourth 
of the gainfully-employed women, are married. The depression of 
1929-1932 probably caused a decrease in the number of married 
women working. However, in some cases, unemployment of the 
husband leads the wife to attempt to obtain work. Women workers 
are found in a great variety of occupations. They are no longer 
confined to a restricted group of jobs. 

On the whole, the wages of women workers are lower than those 
paid to men for similar work. The Women’s Bureau of the federal 
Department of Labor secured statistics regarding the earnings of 
100,967 white and 6,120 Negro women working in 1,472 plants 
in thirteen states in the period 1920-1925. These wage-earning 
women were working in manufacturing industries, stores, and 
laundries. The median 1 weekly earnings of the white women in 
manufacturing industries ranged from $19.30 in Rhode Island in 
1920, to $8.35 in Mississippi in 1924. The median earnings of 
the Negro women engaged in manufacture ranged from $4.89 to 
$8.92 per week. In five-and-ten-cent stores the median wage 
ranged from $8.25 in Alabama in 1922, to $12.20 in Rhode Island 
in 1920. The median weekly wage paid to Negro women working 
in these stores in Missouri in 1922 was $5.10; in Arkansas, $5.05; 
and in South Carolina, $5.25. In 1928, a study was made of over 

1 One-half earned more and one-half less than the median wage. 


WOMEN AND CHILDREN IN INDUSTRY 


349 


6,000 women employees of five-and-ten-cent stores. The median 
wage was estimated to be $12.00 per week. This was less than a 
living wage for women living independently in that year. The 
depression has tended to lower the wage of women as well as of 
men workers. A bulletin of the Women’s Bureau declared that 
“the New York division of women in industry compared the earn¬ 
ings of women placed by public employment agencies in January, 
1929, and in the same month in 1931, and found that a considerable 
decline had occurred. For example, stenographers formerly offered 
$15 to $35 could in 1931 earn only $9 to $20; saleswomen formerly 
offered $13 to $25 were offered a wage as low as $12, though the 
highest ran to $30; while sewing-machine operators before offered 
$18 to $25 could make only $15 to $20 in 1931. 1 


REASONS FOR THE LOW WAGES OF WOMEN WORKERS 

Why do women usually receive lower wages for similar work, 
or for work requiring a comparable degree of skill and training, 
than are paid to male wage workers? A variety of reasons have 
been advanced, (a) Women are physically weaker than men and 
in certain occupations cannot perform all of the operations which 
can be assigned to male workers. ( b ) Women are more liable to 
attacks of sickness than men; but dissipation causes greater ir¬ 
regularity among men than among women workers. ( c ) Women 
are limited to a somewhat smaller number of occupations than men, 
thus tending to increase competition for jobs. It is also more 
difficult for women than for men to go from one locality to another 
seeking employment, (d) Women workers are more frequently 
subsidized than men, by living at home or through aid furnished by 
relatives. However, a large number of women workers are entirely 
responsible for their own support and many who live at home help 
to support the family. ( e ) Women workers have not been organ¬ 
ized into strong unions because many have expected to remain for 
only a brief period in the industrial field, because the past experience 
of women has been such as to make it difficult for them to organize 
and to act unitedly, and in many cases because union men have not 
looked with favor upon the admission of women into labor organiza¬ 
tions. These obstacles seem to be of diminishing importance as the 

1 Bulletin of the Women’s Bureau, No. 91, p. 62. 


35° 


LABOR PROBLEMS 


years pass. (/) The custom of paying women less than men is an 
influence which is not wholly negligible. 


INDUSTRIAL HOME WORK 

In pre-factory days the home and industry were closely joined. 
The home was a hive of industry. With the coming of the factory, 
productive activity has gradually moved out of the home and the 
descendants of home workers have followed it into the factory and 
other workplaces detached from the home. What was once the 
normal under primitive pioneer and small-scale business conditions 
is now abnormal and undesirable. The sending of articles from the 
factory to the home or the small workshop leads to “sweating” in 
industry. Industrial home work and work in any “sweated” 
industry are characterized by low wages, a long working day, 
insanitary workshops and, as a rule, irregular work. Of these four 
characteristics, the first and third may be emphasized. The 
adjectives — low, long, insanitary, and irregular — are more or 
less indefinite, unstandardized, and changing. The conditions 
favorable to the development of sweated industries or of industrial 
home work are found in large cities and their suburbs where it is 
not difficult to obtain women and children as wage workers, in 
industries in which inexpensive or no machinery is used and in 
which the demand for the products is irregular or non-standardized. 
A factory owner may resort to sending out work in a rush season 
in order to save in overhead expenses. The clothing industry has 
been the most important sweated industry; but the growth of 
clothing factories has reduced greatly the relative importance of 
home work in that industry. A considerable variety of products 
may be wholly or partially produced for wages within the home — 
embroidery, lamp shades, powder puffs, gloves, bead necklaces, 
artificial flowers, cloth-covered buttons, and many other small 
articles in which hand work predominates. Regularization of work 
in a factory will reduce the incentive to send out goods to the 
homes or small shops for finishing. The enactment of a minimum 
wage law is one method of combating sweated industries. Many 
states require a written permit before a room or apartment in any 
home or tenement may be used for the purpose of manufacturing 
goods not for use by members of the family. Efficient regulation 


WOMEN AND CHILDREN IN INDUSTRY 


35i 


of industrial home work is not easy of accomplishment since the 
work is carried on in so many small and obscure workplaces and 
rooms scattered over a wide area. In New York, in the year ending 
June 30, 1927, 21,500 persons were found to be engaged in indus¬ 
trial home work in licensed houses. In the period 1925-1928, the 
typical family engaged in home work added only about six to ten 
dollars per week to its income. 1 


CHILDREN IN THE MACHINE AGE 

The lives and activities of children, as well as of adults, have been 
markedly affected by the growth of cities. With the advent of the 
power-driven machine and the removal of industry from the home 
or its immediate surroundings, the young no longer have intimate 
contact with the activities of those making a living, the chores of 
an earlier and simpler civilization have disappeared except in the 
rural districts, and the opportunity for wholesome recreation and 
play has been reduced in the crowded parts of urban centers almost 
to the vanishing point. Cities and children do not mix well; and 
much of our school work makes little appeal to the interests of the 
child. The environmental background of the human race and the 
routine, crowding, and sedentary living in the American city are 
as far apart as the poles of a magnet. The destructive street gang 
and the juvenile delinquent of the modern American city develop 
quite naturally out of crowding and the lack of play opportunities. 
Child labor in a factory, in a store, or on the street is a poisonous 
survival of the child work of an earlier day; and the city street is 
not a proper substitute for fields, streams, and forests. The White 
House Conference on Child Health and Protection (1930) has 
placed before the American people a series of “drab facts”; and 
the depression has doubtless added to the dark lines of the un¬ 
pleasant picture. In 1930, of the forty-five millions of children 
under eighteen years of age: — 

6,000,000 are undernourished 
1,000,000 have damaged hearts 
1,000,000 have defects of speech 
675,000 are called “problem children” 

(These are the maladjusted, the queer, the neurotic.) 

1 Industrial Home Work, Bulletin of the Women's Bureau, No. 79. 


352 


LABOR PROBLEMS 


500,000 are dependent 
450,000 are mentally retarded 
382,000 are tubercular 
342,000 are hard of hearing 
18,000 are totally deaf 
300,000 are crippled 
200,000 are delinquent 1 

REFERENCES 

Abbott, Edith, “A Study of the Early History of Child Labor in 
America,” American Journal of Sociology, Vol. 14, pp. 15-37 
-, Women in Industry 

Callcott, Mary S., Principles of Social Legislation, Chaps. 3, 6, and 8 
Carlton, F. T., Education and Industrial Evolution, Chaps. 5 and 6 
-, The Industrial Situation, Chaps. 3 and 5 

Commons, J. R., Documentary History of American Industrial Society, 
Vol. 5, pp. 57-66 

Commons, J. R., and Andrews, J. B., Principles of Labor Legislation, 
rev. ed., Chaps. 4, 5, and 7 
Henry, Alice, The Trade Union Woman 
Hoopingarner, D. L., Labor Relations in Industry, Chap. 21 
Johnsen, J. E., Child Labor 

Kelley, Florence, Some Ethical Gains through Legislation, pp. 3-104 
Patterson, S. H., Social Aspects of Industry, Chap. 8 
Watkins, G. S., Labor Problems, Chaps. 12-14 
Bulletins of the Women’s Bureau, U. S. Department of Labor 
Report on the Condition of Women and Child Wage Earners in the United 
States, Senate Document, No. 645, Sixty-first Congress, Second Session 

1 See article by Averill, L. A., The Scientific Monthly, Dec., 1931. 


CHAPTER XXI 


LABOR LEGISLATION 

LEGISLATIVE AND CONSTITUTIONAL DIFFICULTIES 
IN THE UNITED STATES 

Labor legislation in the United States meets obstacles peculiar 
to this country. Our system of written constitutions and our dual 
form of government, dividing responsibility for action or inaction 
between the federal government and the various state govern¬ 
ments, introduce many complications. Constitutional objections 
and state jealousies bulk large in preventing the passage of statutes 
protecting wage workers, and in emasculating or annulling those 
which are actually placed upon the statute books. State laws must 
conform to the framework of a state constitution and to that of the 
federal Constitution. A law passed by Congress must conform to 
the latter. If not, such legislation may be declared unconstitutional 
by the courts, and no longer be enforceable. The courts do not 
pass upon the constitutionality of legislative acts unless brought 
before them in a formal manner; that is, by means of a case in¬ 
volving an alleged violation of the law. The court of final jurisdic¬ 
tion in regard to a state constitution is the supreme court of the 
particular state; the United States Supreme Court is the final 
arbiter in regard to constitutionality under the federal Constitution. 
The ideals embedded in the American constitutional system are 
essentially English in origin; but the student must not overlook 
the fact that those ideals originated in a unique epoch in the history 
of English political philosophy. The federal Constitution was 
formulated and adopted by the American people at a time when 
the pendulum swing of sentiment had reached a maximum in favor 
of non-interference on the part of government with the conditions 
of industry. 

Under our dual form of national and state governments, nearly 
all the legislation regarding the regulation of industrial plants 

353 


354 


LABOR PROBLEMS 


is in the hands of the states. The regulation of interstate and 
foreign commerce is delegated to the federal government. Unless 
the workers affected are directly engaged in interstate or foreign 
commerce, labor legislation rests with the state governments. As 
there are forty-eight states, uniformity in legislation is very diffi¬ 
cult of attainment. Each state may, however, become an experi¬ 
ment station in legislation. The mistakes of one state may be 
avoided by others; and successful legislation in one state may be 
utilized by another state. This advantage due to state control is 
counterbalanced by the fear that a state passing a new piece of 
legislation — for example, requiring a short working day — may 
find itself at a disadvantage in competition with the industries of 
neighboring states which have not adopted such legislation. 

Under the gild system in the medieval cities, and in the develop¬ 
ing nations of the sixteenth and seventeenth centuries under the 
mercantile system, industry and trade had been minutely and 
rigidly regulated. In the eighteenth century, as the old industrial 
forms broke down and were replaced by those which may be called 
modern, the pressure against mercantilism became strong and 
finally irresistible. The restrictive barriers were pushed aside, and 
a new economic epoch opened. The sudden release from the strong 
and unyielding bonds of custom and law which were characteristic 
of feudalism and mercantilism produced the inevitable reaction. 
The new slogans were “non-interference,” “freedom of trade and 
of contract,” and “competition is the life of trade.” Individualism 
and “the return to nature” were placed prominently in the fore¬ 
ground. 

The individualism of the period conceived that external control 
of industrial affairs was not only unnecessary but an actual menace 
to economic progress. Each and every individual was to be left 
free to work when and where he pleased, or to hire and discharge 
whomsoever he saw fit. Wages and prices should be fixed as the 
result of free and untrammeled competition. The general welfare 
of society was to be conserved by allowing each individual to pursue 
unhampered what seemed to be his own best interests. “En¬ 
lightened self-interest was the incentive, universal free competition 
was the force” which held economic society together and caused 
progress. These individualistic ideals sternly opposed all legisla¬ 
tive interference with freedom of contract and the labor bargain, 


LABOR LEGISLATION 


355 

and considered all combinations for the purpose of affecting prices 
or wages to be inimical to the public welfare. 

But the individualism of the eighteenth century and of the first 
half of the nineteenth was abnormal and one-sided. It was the 
product of the conditions which made England the world leader in 
commerce and in industry. Earlier centuries were much less in¬ 
dividualistic, and the intricacy and interdependence of modern life 
cause greater emphasis to be placed upon social needs, upon coordi¬ 
nation and teamwork. This ultra-individualistic epoch is the 
bridge between the old era of medival restriction of the aristocratic 
and paternalistic type which fixed maximum conditions for the 
mass of the workers and the era of modern social and industrial 
legislation of the democratic type which determines minimum 
standards for industry. The feudal idea was to keep men and 
women of the lower classes in their places and to ameliorate the 
conditions within their particular social compartment; the modern 
democratic ideal is to remove the artificial obstacles which tend to 
perpetuate social and economic inequalities, and to give each in¬ 
dividual an opportunity to help himself. Opportunity for each and 
for all, not paternalism or philanthropy on the part of a few, is the 
aim of modern industrial legislation. 

The exaggeration of the non-interference system and the glorifi¬ 
cation of the ideal of negative liberty was due to the enthusiasm and 
the hopes of a strong and aggressive class of English merchants 
and industrialists who were at that time leading the world in 
commerce and industry. To cut the old medieval bonds which 
favored “well-ordered” trade and “fair” prices signified progress, 
freedom, and wealth-getting to shrewd men conscious of their 
superior strength and ability. They were eager to play the fas¬ 
cinating commercial game without harassing rules. Just at the 
flood-tide of this reaction against medievalism and mercantilism, 
and before the evils of unrestrained competition and of unregulated 
industry became apparent, the American nation was formed and 
the American people adopted written federal and state constitu¬ 
tions. 

To the Americans of the last of the eighteenth century, familiar 
with the harassing restrictions imposed by the English governors 
and proprietors, and accustomed to the self-reliant life of the 
frontiersman and primitive agriculturalist, any system of constitu- 


LABOR PROBLEMS 


356 

tional or of statute law which allowed the imposition of restraints in 
regard to the disposal of property or of labor power seemed to con¬ 
tain elements of tyranny. Their past experience on this continent 
and in England wrought into the very fiber of their being a distrust 
of a military chieftain and of an overlord of the semi-feudal type. 
The environment and past experience of the American pioneer 
naturally led him to accept the laissez faire doctrine with extraor¬ 
dinary avidity and enthusiasm; and he exhibited his extreme con¬ 
fidence in the universal and perpetual validity and desirability of 
that system by crystallizing into bills of rights and rigid constitu¬ 
tional forms these principles of an exceptional or unique epoch in 
the world’s history. And this crystallization occurred at the very 
threshold of an era in which the fundamental postulates of the non¬ 
interference and decentralized system of governmental control 
were being consigned to the scrap-heap by the uplift of a new 
industrial system. At the very time when a weak and growing 
wage-earning class needed protecting legislation to guard it from 
the aggressions of the economically stronger employing class, the 
laissez faire philosophy was invoked to prevent the erection of 
adequate protecting barriers. Using liberty and freedom as slogans, 
laissez faire philosophy is favorable to the interests of the economi¬ 
cally strong, and inimical to the interests of the economically weak. 

According to the laissez faire theory, unrestrained competition 
automatically leads to fair wages, fair prices, and decent conditions 
of working and living; and legislative interference in regard to the 
relations between labor and capital was held to be unwise and un¬ 
necessary. This individualistic theory may not have been very 
unjust or wide of the mark in a country of undeveloped resources, 
small businesses, and local markets. The employer and employed 
of a century ago were closely in touch with each other both during 
and after the working day; and the producer and consumer were 
acquainted with each other. In our early national history the 
theory of non-interference may have been carried to an extreme, 
even for that day and generation; but, if so, it was a natural re¬ 
action from the oppression of colonial trade restriction. 

Since the time of the adoption of the federal Constitution, in¬ 
dustrial conditions have undergone revolutionary transformations 
which have greatly modified the relations between the employer 
and the employee, and between producer and consumer. Large 


LABOR LEGISLATION 


357 


business combinations, the disappearance of free land, the growth 
of world-wide markets, and the use of minute subdivision of labor 
have produced conditions such that competition is no longer ade¬ 
quate to insure proper working conditions in industry, or proper 
composition of products. Trade-union and legislative action must 
now be resorted to in order to accomplish what in a simpler indus¬ 
trial order may have been fairly well brought about by competition. 
But the legal rules and formulae applicable to a crude industrial 
society are still applied in this country. Of course, these principles 
have not remained unchanged. Legal interpretation of the Con¬ 
stitution and of the common law has slowly modified as the years 
have rolled by. Today it would be difficult for one of the members 
of the Constitutional Convention of 1787 to understand our 
interpretation of certain important sections of the Constitution. 
Social and economic adjustments have been so obvious and so 
striking that many laws affecting the condition of employment now 
pass the constitutional test which only a few years ago would have 
been summarily rejected. Nevertheless, it is true that we of the 
twentieth century are still controlled by the ideals generated at the 
time of an enthusiastic reaction from the regulations imposed by 
medievalism and mercantilism. It has come to pass that a legal 
doctrine and a social ethic which were especially acceptable to a 
frontier people who had been harassed in colonial times by Eng¬ 
land’s restrictive policy, through incorporation into the federal 
and state constitutions have continued as potent and compelling 
forces long after their advocacy has been given up by the majority 
of the people of the nation. 


WHAT IS LIBERTY? 

The older view of liberty was purely negative; the concept which 
is gradually winning favor is a positive one. According to the 
older idea liberty consisted in the absence of restraints; the 
savage, unhampered by the legal restraints, social conventions, 
and ethical imperatives of modern life, was a free man par ex¬ 
cellence. Liberty in its negative aspect is like a geometrical area, 
and every law restraining the individual in any manner signifies a 
reduction in the extent of this area. The modern positive view 
conceives of liberty as thriving in the presence of law. Laws 


358 


LABOR PROBLEMS 


regulating the mutual relations between individuals of various 
classes and interests may increase liberty, instead of interfering 
with the rights and privileges of men. Under certain conditions 
freedom to do without legal interference means the loss of real 
freedom of action. With the establishment of the right of contract 
came the refusal to give the free person the right to contract himself 
into slavery. What, upon superficial examination, might seem to 
be a fetter may after further experience prove to be liberating. The 
savage or the solitary frontiersman may rationally cherish the 
negative ideal of liberty, but the member of a modern crowded and 
interdependent nation finds that the negative type of liberty leads 
to the coercion of the weak by the strong. Negative liberty carried 
to its logical extreme leads to anarchy. Liberty does not mean the 
same today as it did yesterday, and tomorrow’s interpretation 
will be made in the light of tomorrow’s industrial and social con¬ 
ditions. The worker is at liberty to quit his job and seek an¬ 
other. He is not bound as was the slave or the serf; but much 
of this freedom is not real, it lacks substance. The worker has 
practically no voice in modern industry in regard to working con¬ 
ditions. 

Men often overlook the fact that there are two important kinds 
of restraint placed upon individuals living in a civilized community 
— economic and legal. Individual liberty, or the freedom of an 
individual from restraint, may often be increased by adding 
certain legal restraints. The sum total of restraint may be de¬ 
creased by adding to legal restraints which remove economic 
restraints. Many American judges seem rarely able to comprehend 
the simple fact that the addition of restraints may increase actual 
and concrete freedom of action. As an example, consider the law 
fixing the maximum number of hours per day in which women 
wage workers may be employed in factories. Manifestly such a law 
adds to the legal restraints thrown around women workers; but 
to assert that such a statute, framed for the purpose of protecting 
women wage workers from undue economic compulsion, means 
interference with any sort of freedom which is worthwhile to them 
is absurd or disingenuous. Such legislation leads to relief from the 
steady pressure of economic coercion which forces women to work 
many hours each day, to injure their health, and to endanger 
posterity. Such a statute can only constitute an interference with 


LABOR LEGISLATION 


359 

any real and tangible form of freedom of contract when both 
parties to the contract are equal as bargainers. Mrs. Robins, the 
former president of the National Women’s Trade Union League, has 
said in words -tinged with irony: “Every one who knows what is 
going on in the world (except judges and lawyers) knows that 
freedom of contract can exist only between parties on an economic 
equality.” Equity between equals is often injustice when applied 
to relations between unequals. In short, it is not difficult, by fixing 
the attention upon the past and upon our outgrown industrial sys¬ 
tem, so to interpret liberty and freedom of contract as to lead to 
injustice and to coercion of the weak. “The law, in its majestic 
impartiality, forbids the rich and the poor alike to sleep on park 
benches or to beg in the streets.” 


TREND OT COURT DECISIONS 

The extreme aversion to legal limitations upon the independence 
of the individual and the excessive fear of governmental control 
have led to some unanticipated consequences. Certain negative 
clauses which restrain constituted authority were incorporated into 
our state and federal constitutions. These clauses were aimed at 
the ever-present specter of tyrannical government. By a peculiar 
transmutation through judicial interpretation they have become 
bulwarks behind which property owners are able strongly to en¬ 
trench themselves. The familiar clause declaring that no person 
shall “be deprived of life, liberty, or property, without due process 
of law,” was originally inserted into our constitutional system in 
order to prevent confiscation of property by tyrannical officials. 
Another familiar prohibition incorporated into our constitutional 
system for similar reasons declares that no law may be passed 
which interferes with the freedom of private contracts or engage¬ 
ments. Again, more or less well-defined prohibitions of special or 
class legislation which grants special privileges are found in the 
constitutions of many states; and the fourteenth amendment to 
the federal Constitution among other things declares “that no 
State shall make or enforce any law which shall abridge the privi¬ 
leges or immunities of citizens of the United States.” Strictly 
interpreted, these clauses seem to frame a constitutional prohibi¬ 
tion of legislation which interferes with the so-called freedom of 


LABOR PROBLEMS 


360 

contract, and of class legislation. In reality, these prohibitions 
artificially strengthen what are called individual and corporate 
rights, and give those rights an almost impregnable position. “ The 
general status of the property owner under the law cannot be 
changed by the action of the legislature, or the executive, or the 
people of a State voting at the polls, or all three put together. It 
cannot be changed without either a consensus of opinion among the 
judges, which should lead them to retrace their old views, or an 
amendment of the Constitution of the United States by the slow 
and cumbersome machinery provided for that purpose, or, last — 
and I hope most improbable — a revolution.” 1 These prohibitions, 
which are so firmly embedded in our legal system, have been con¬ 
strued to prohibit any legislation which deprives a citizen of the 
right to buy or sell labor power whenever and under whatsoever 
conditions he may desire to buy or to sell. 

The courts have never rigidly adhered to a strict interpretation 
of these phrases. A certain amount of class legislation has been 
allowed as a matter of practical expediency. Protective tariffs 
and child labor laws have long been allowed. Contracts which are 
“contrary to public policy” are held to be null and void. Agree¬ 
ments in restraint of trade and contracts not to marry are held to 
be contrary to public policy. The elastic element in our constitu¬ 
tional system in so far as it touches the question of labor legislation 
is found in the concept of “contrary to public policy.” Inevitably 
the interpretation, judicial or otherwise, changes as industrial and 
social forms and relations undergo modification. The law is a 
progressive science; but its progress is deliberate. This regulative 
power which modifies the right of freedom of contract and intro¬ 
duces certain limitations upon the exercise of property rights is 
called the “police power of the state.” The police power is a 
comprehensive and somewhat vague term. It has two chief 
attributes; “it aims directly to secure and promote the public 
welfare, and it does so by restraint and compulsion.” 2 As long as 
social and industrial conditions change, the police power must be 
capable of development. It is a safety valve in any community 
whose highest authority is derived from a written constitution 
which cannot readily be amended. The problem is to secure an 

1 Hadley, A. T., The Independent, April 16, 1908. 

2 Freund, E., The Police Power , p. 3. 


LABOR LEGISLATION 


361 

extension of the police power which keeps pace with industrial and 
social change; and this problem is a difficult one in an age of revo¬ 
lutionary industrial and commercial changes. An extension of the 
police power is usually accompanied by an enlargement of personal 
freedom for individuals in under-privileged groups. History indi¬ 
cates that such programs are “ resisted by the powerful as a blow 
aimed at the foundations of society.” 1 Each group likes to think 
that its welfare signifies also the welfare of society. Politics con¬ 
sists, it has been asserted, in making one’s interest appear to be 
the interest of the nation. 

The inalienable or natural rights in which colonial and pioneer 
Americans were interested related to tangible property — rights of 
acquiring, possessing, and protecting property. These are the 
rights indicated in the Declaration of Independence. As com¬ 
mercial and industrial enterprises became important, or as market¬ 
ing and bargaining became prominent, the right to withhold 
property — capital or labor power — from use and the right to 
do business without interference, became of great significance. 
These are rights relating to intangibles . 2 But, in today’s interde¬ 
pendent industrial and social order, the typical wage worker insists 
upon the significance of an entirely different list of rights: the 
right of a job which means access to the necessities and decencies 
of life; the right of regular employment; the right to maintain a 
decent standard of living . 3 These “rights” are not safeguarded 
by constitutions and by the precedents of the common law. If 
legal standing is acquired, it will come as the result of legislative 
action and through the enlargement of the police power of the 
state. 

Labor legislation constitutes an interference with the original 
and unmodified doctrines of liberty and of the freedom of con¬ 
tract. Labor legislation when sustained by the courts is sustained 
as a legitimate exercise of the police power. The decisions are as 
yet conflicting, and the outcome in a given case involving the 
application of the police power, uncertain; but the philosophy 
underlying our judicial system is undoubtedly undergoing radical 
and far-reaching modifications. The members of the Supreme 

1 Ross, E. A., Principles of Sociology, p. 373. 

2 Commons, J. R., and Andrews, J. B., Principles of Labor Legislation, pp. 5-9. 

3 Tugwell, R. G., Industry's Coming of Age, pp. 218-220. 


362 


LABOR PROBLEMS 


Court of the United States are invariably men past middle age. 
These men received their training and had their ideals and phi¬ 
losophy of life quite definitely formulated a generation before their 
elevation to the supreme bench. In that period the fundamentals 
of economic and political science have been subjected to important 
transformations. As younger men, trained in the newer school 
of economics and saturated with the recent teachings of our col¬ 
leges and universities, come to the front in the legal profession, 
we may confidently expect the older individualistic theory of the 
law and of justice to be more rapidly modified. The trend of 
court decisions has been away from the traditional idea of freedom 
of contract and of laissez faire, and toward an increase in the 
police power of the state in the interests of practical and tangible 
freedom for the individual. The pressure of industrial change has 
been so potent and compelling that legal precedents, social inertia, 
and the direct opposition of certain classes in the community have 
gradually, but tardily, yielded. Many of the limitations which 
have been deemed essential by our courts may soon be seen to be 
non-essential and subversive of free institutions. The validity of 
this thesis must be maintained by a presentation .of the history 
and present status of labor legislation. One student of this prob¬ 
lem has arrived at the conclusion that the constitutionality of a 
restrictive labor law depends upon its wisdom. “In other words, 
granted that a restriction is wise under the given condition, it 
is an easy task to prove that it is also constitutional.” 1 This 
over-enthusiastic statement is borne out in a large measure by the 
court decisions relative to the constitutionality of laws limiting 
the hours of the working day. It is perhaps needless to remark 
that the interpretation of what is wise or unwise in a given situation 
will be subject to wide variation. 

Perhaps the most clear and definite example of judicial advance 
is found in two Illinois decisions upon laws limiting the working 
hours of female factory employees. The first decision of the 
Supreme Court of that state was handed down in 1895. An eight- 
hour law was declared unconstitutional. Fifteen years later the 
court declared a ten-hour law constitutional. The contrast in the 
two decisions is indicated by the following extracts from those 
decisions. In 1895 the court declared: “This enactment is a 
1 Seager, H. R., Political Science Quarterly , Vol. 19, p. 589. 


LABOR LEGISLATION 363 

purely arbitrary restriction upon the fundamental right of the 
citizen to control his or her time and faculties. It substitutes the 
judgment of the legislature for the judgment of the employer and 
employee in a matter about which they are competent to agree 
with each other. But the police power of the state can only be 
permitted to limit or abridge such a fundamental right as the right 
to make contracts, when the exercise of such power is necessary 
to promote the health, comfort, welfare, or safety of society or the 
public; and it is questionable whether it can be exercised to prevent 
injury to the individual engaged in a particular calling.” Ten 
years earlier, in 1885, the New York Court of Appeals in declaring 
unconstitutional a law prohibiting the manufacture of cigars in 
tenements asked: “What possible relation can cigar making in 
any building have to the health of the general public?” In the 
1910 decision the court recognized that a long working day might 
injure women workers even if it did not adversely affect male 
wage earners. It presented a very different view as to the police 
power. “It would, therefore, seem obvious that legislation which 
limits the number of hours which women shall be permitted to 
work to ten hours in a single day in such employments as are 
carried on in mechanical establishments, factories, and laundries, 
would tend to preserve the health of women and insure the pro¬ 
duction of vigorous offspring by them, and would directly conduce 
to the health, morals, and general welfare of the public, and that 
such legislation would clearly fall within the police power of the 
state.” The early decision is permeated with the old individualistic 
and negative theory of liberty. The more recent decision accepts 
the doctrine that the welfare of the individual is essential to the 
welfare of the general public, and that legal restraints may increase 
the tangible liberty of the individual and promote the general 
welfare. A decision of the Supreme Court of the United States, 
sustaining an Arkansas statute providing for the payment of wages 
to coal miners according to the weight of coal mined before it is 
screened, has opened the way for much desirable social and labor 
legislation. The court took a sober view of the constitutional 
limitations placed upon its own powers to annul legislation. “If 
the law in controversy has a reasonable relation to the protection 
of the public health, safety, or welfare, it is not to be set aside be¬ 
cause the judiciary may be of the opinion that the act will fail of 


364 


LABOR PROBLEMS 


its purpose or because it is thought to be an unwise exertion of the 
authority vested in the legislative branch of the government.” 1 


HISTORY OF LABOR LEGISLATION 

The historical background for our labor legislation is found in 
England. Like other European countries in the medieval period 
England minutely regulated the activities of the laboring class. 
Wages, the length of the working day, apprenticeship, and the 
like were minutely determined by statutes, and combinations of 
workingmen were prohibited. Doubtless, as in recent years, the 
amount of regulation and restriction was theoretically greater as 
indicated by the mass of legislation than it was in actual practice. 
Again, as at the present time, legislation undoubtedly outstripped 
enforcement. In the eighteenth century, as the new industrial 
regime began to destroy the old, opposition to regulation developed. 
Gradually the old medieval system fell into disuse and disrepute. 
The old regulations became burdensome; mobility of labor instead 
of fixity was demanded by the rising manufacturing class. The 
customary regulations in regard to apprenticeship, formulated in 
the time of Queen Elizabeth, were destroyed piecemeal. After 
Lord Mansfield had voiced the sentiments prevailing during the 
first years of last century by declaring this famous statute to be 
“against the natural rights and contrary to the common law rights 
of the land,” it was removed in 1814 from the statute books. The 
assault upon the Navigation Acts began in 1796. In the forties 
the long struggle for the repeal of the corn laws was won. Step 
by step mercantilism had yielded to the system of non-interference; 
but while the life of the old system of regulation was ebbing away, 
unexpected evils and complications appeared. The harmony and 
beneficence of laissez faire had apparently been over-emphasized. 
Production increased; but misery multiplied or became more ap¬ 
parent. Displacement of labor, over-worked children, unhealthful 
working conditions, and dreary factory villages became common 
phenomena. “In many ways, therefore, it might seem that the 
great material advances which had been made, the removal of 
artificial restrictions, the increase of liberty of action, the extension 
of the field of competition, the more enlightened opinions on eco- 

1 McLean vs, Arkansas, 211 U. S. 539. 


4 


LABOR LEGISLATION 


36S 

nomic and social relations, had failed to increase human happiness 
appreciably; indeed, for a time had made the condition of the mass 
of the people worse instead of better.” 1 The evils of the period 
of transition from the handicraft to the factory system led to the 
birth of a new system of industrial regulation even before the old 
was entirely swept aside. The competitive game was not allowed 
to be fought without rules, even in the period when individualism 
was at its flood. 

In 1802 a law was passed to alleviate the condition of the over¬ 
worked, underfed, and abused pauper children who had been taken 
from the poorhouses of the large cities of England and transported 
to the sparsely settled districts of the northwest which were de¬ 
veloping manufacturing centers because of the presence of water 
power. This bill, entitled “Health and Morals Act to Regulate 
the Labor of Bound Children in Cotton Factories,” was, as the 
title indicates, restricted in its application; its importance lies 
chiefly in the fact that it is the forerunner of a vast array of factory 
laws for the amelioration of the conditions of workers of all sexes 
and ages in a variety of industries. “From the beginning the 
protection of the state was gradually extended to ‘young people’ 
and other textile industries (1833), then to women (1844), next 
to all large industries (1864), then to the smaller workshops gen¬ 
erally (1867), and finally in 1878 blossomed out into a full-fledged 
factory act, regulating industry generally in behalf of the health 
and safety of the laboring population.” 2 

In the medieval period, since wages and other conditions of labor 
were subject to regulation by the government, concerted attempts 
to raise wages or to shorten the working day were illegal because 
such attempts interfered with governmental regulation. Begin¬ 
ning with the sixteenth century various “combination acts” were 
passed. The last of such acts was enacted at the close of the 
eighteenth century. All agreements between workmen entered 
into for the purpose of raising wages or of changing any other 
condition of employment were declared illegal. Workmen entering 
into such combinations were liable to be punished by imprison¬ 
ment. This legislation made the essential methods and policies 
of organized labor unlawful. During the first years of the nine- 

1 Cheyney, E. P., Industrial and Social History of England, p. 239. 

2 Adams, T. S., and Sumner, H., Labor Problems, p. 464. 


LABOR PROBLEMS 


366 

teenth century, not only were labor organizations illegal, but the 
weight of public sentiment was against them. Combination laws 
were relics of the old mercantile system carried down into a period 
when laissez faire was dominant; but the ruling classes felt that 
this exception was favorable to their interests. 

Many English workmen were prosecuted in the first quarter 
of the century under the combination laws. In 1824 the combina¬ 
tion laws were repealed; but in the following year the pendulum 
swung back slightly and another law was passed. The net result 
of the two laws was to allow wage earners to meet for the purpose 
of raising the wages or shortening the working day of those present 
at the meeting. Violence, “ intimidation,” and “ obstruction ” to 
accomplish these purposes were illegal. Under this legislation labor 
organizations became lawful, but their activities were confined 
within narrow limits. In 1859 it became lawful to demand higher 
wages or a shorter working day even when persons other than the 
strikers or petitioners were involved. Peaceful persuasion of fellow 
workmen was legalized. Finally, by laws passed by Parliament 
in 1871 and 1875, trade unions were definitely legalized and their 
normal activities were declared to be no longer subject to legal 
disapproval. Unions were no longer to be considered combinations 
in restraint of trade, and their funds were protected. Combinations 
to raise prices were still illegal, but combinations to raise wages 
were taken out of that category. The common law doctrines in 
regard to restraint of trade and special legislation were modified 
in favor of labor organizations. 

In the United States a similar change may be noted; but in 
this country not only the common law but our constitutional 
system has acted so as to retard any modification of the doctrines 
of freedom of contract and of no class legislation which would 
allow the legalization of labor organizations and of legislation pro¬ 
tecting the employee. Much labor legislation has been declared 
unconstitutional; and, as a consequence, American workingmen 
have come to distrust the courts more than their English brethren. 
With the exception of the mechanics’ lien law, free school legisla¬ 
tion, and a few isolated attempts to limit the hours of labor for 
women and children, no labor legislation of importance was passed 
until after the close of the Civil War. Massachusetts has led in 
labor legislation. In 1866 a child labor law was passed; in 1869 


LABOR LEGISLATION 


367 

a state bureau of labor was established; in the seventies a ten-hour 
law for women and child workers and a factory inspection act 
were passed. These laws have served as models for similar legisla¬ 
tion in many other commonwealths. 

THE CHIEF FORMS OF LABOR LEGISLATION 

Labor legislation in the states of the United States relates to 
a variety of subjects, such as the establishment of departments 
of factory inspection, limitation of the hours of labor, prohibi¬ 
tion of night work or of Sunday labor, the exclusion of certain 
classes of wage earners from certain kinds of employment, provi¬ 
sions for the frequent payment of wages, prohibition of truck 
payment, guards for dangerous machinery, regulations as to the 
sanitary conditions within factories and workshops, regulations as 
to cleaning or oiling machinery, apprenticeship, discrimination 
against union men either in hiring or discharging workers, and 
many other matters touching upon the health, safety, and well¬ 
being of wage earners. In addition many regulations have been 
passed relating specifically to mines and mine workers. 

The ease with which labor legislation may be enforced depends: 
(a) upon the efficiency of the inspection department; ( b ) upon the 
power given that department; and ( c ) upon the phraseology of 
the law — for example, a law limiting the hours of labor and fixing 
the limits within which the work of the day may be done is more 
readily enforced than one merely limiting the hours. Much labor 
legislation is rendered useless or is emasculated through the lack 
of proper inspection, or by technicalities which make enforcement 
difficult. Again, the insertion of some clause providing for certain 
exemptions may result in its annulment by the courts on the 
ground of special legislation. There is a bewildering complexity 
in American labor legislation, coupled with extreme variations 
among states. In too many cases, boards with overlapping juris¬ 
dictions have been created; in certain states eight or more distinct 
groups of officials have been concerned with the administration 
of the labor law. The factory inspectors have as a rule been too 
few in number adequately to perform the task assigned them; 
and appointments have often been made purely for political reasons. 
However, the administration of laws in regard to safety in factories 


LABOR PROBLEMS 


368 

has been made comparatively easy as a consequence of the passage 
of workingmen’s compensation acts. Employers now welcome the 
suggestions of inspectors. 

In regard to the discretionary power placed in the hands of the 
officials charged with the administration of factory legislation, 
three methods have been used. (1) The law requires certain pro¬ 
visions for the protection of employees, but leaves the initial step 
to the discretion of the factory inspector. Much is left to the judg¬ 
ment of an inspector who is too frequently overworked, underpaid, 
and poorly trained. (2) The legislature carefully defines the neces¬ 
sary protection and states who must provide it. The inspector 
must determine whether the rigid requirements are complied with. 
As the legislature is not well equipped to pass upon such legisla¬ 
tion and as it meets, as a rule, but once in two years, the laws can¬ 
not easily be modified to meet new conditions or to remedy defects. 
(3) The statutes provide that suitable and reasonable safeguards 
must be provided; but leave the exact definition of “suitable” 
and “reasonable” to a commission which may hire experts, in¬ 
struct, and direct the factory inspectors. The third method is 
superior to the first and second. An industrial commission, subject 
to court review, may determine what provisions are necessary to 
insure “safe” conditions in factories and other workplaces. The 
commission may from time to time modify their rulings as changing 
conditions may demand. The specific provisions of the industrial 
code may in this manner be carefully worked out by an adminis¬ 
trative body rather than by a purely legislative body. The factory 
inspectors are instructed to see that the standardized requirements 
of the commission are complied with. Among the states using 
the third or commission plan for the enforcement of factory legisla¬ 
tion are California, Colorado, Massachusetts, New York, Ohio, 
Oregon, Pennsylvania, and Wisconsin. 

PRESENT STATUS OF LABOR LEGISLATION 

The police power of the state furnishes the legal basis for labor 
legislation; but the fundamental sanctions are social and economic 
rather than purely legal. These sanctions rest upon at least two 
well-grounded piers — racial improvement and humanitarianism 
or the protection of the weak from the aggression of the strong. 
Long working days, speeded-up workers, insanitary shops, dan- 


LABOR LEGISLATION 


369 

gerous machinery — all tend to render workers and their descend¬ 
ants weaker and more inefficient, and to lower the physical, mental, 
and moral stamina of the race. “The fundamental purpose of 
labor legislation is the conservation of the human resources of the 
nation” is a familiar motto of the American Association for Labor 
Legislation. 

Society is slowly coming to the realization of the fact that equal 
treatment of unequals often results in gross injustice. Strong, 
well-organized workers may not need protective laws; the pro¬ 
fessional man may not, although he usually wishes legal enactments 
as to professional requirements for entrance into the profession; 
but the child and unorganized or poorly organized men and women 
workers certainly are at a disadvantage in bargaining with well- 
organized capital. Legal protection is necessary in order to insure 
fair or even decent treatment. 

Having thus briefly stated the reasons for protective laws for 
workers, and outlined the causes of the constitutional difficulties 
which obstruct progress, we may now turn to a consideration of 
some of the important kinds of labor legislation, actual and pro¬ 
posed. Factory acts relating to sanitary conditions in factories, 
workshops, and mines, to the guarding of dangerous machinery, 
and to provisions for fire escapes and the like, have not been greatly 
interfered with because of constitutional difficulties. The courts 
generally recognize such interference with industry on the part of 
state legislatures to be a legitimate exercise of the police power of 
the state. Such provisions are written into statute laws in the 
interest of public health and public safety. The courts recognize 
that the interest of society in these fundamental matters is more 
important than the individual right to an abstract and theoretical 
freedom of contract, that is, freedom to enter into a contract which 
will endanger health and life. 

State laws relating to hours of labor, night work, dangerous or 
unhealthful working conditions, wage rates, methods of wage pay¬ 
ment, and other matters affecting working conditions may be 
declared unconstitutional and therefore null and void under either 
the state or the federal Constitution. A federal statute can only 
be declared unconstitutional under the federal Constitution and in 
federal courts. The courts have not been easily convinced that 
labor legislation is a legitimate exercise of the police power of the 


37 ° 


LABOR PROBLEMS 


state and not unwarranted encroachments upon the freedom of 
contract and the rights of property guaranteed by the federal and 
various state constitutions. Before entering upon a somewhat de¬ 
tailed examination of the attitude of the courts toward these im¬ 
portant kinds of labor legislation, it must be noted that there are 
three different classes of wage earners to be considered — children, 
women, and men. The courts look upon these classes differently. 
It may also be urged that from a social or an economic point of 
view lines of demarcation may also be drawn between these classes 
of workers. Wages and the possibility of organization differ, and 
the effect of working conditions upon home life and racial efficiency 
is not the same for all three classes. The police power of the 
state may readily be involved in favor of children since constitu¬ 
tional obstacles have long been swept aside in regard to minors. 
In the case of women workers the courts have sanctioned less 
legislative interference than they will in the case of children; 
but more than in the case of men. Two kinds of protective laws 
— those in regard to hours of work, and dangerous or unhealthful 
occupations — are inter-related and may be considered in connec¬ 
tion with each other. 

Laws regulating or prohibiting the employment of children as 
wage workers are now uniformly recognized as within the legitimate 
sphere of the police power. Minors have long been considered as 
the recipients of particular care and protection from organized 
society. As minors are not free to make contracts without super¬ 
vision, child-labor laws are not held to violate the constitutionally 
guaranteed rights of children. The courts recognize the constitu¬ 
tionality of legislation relieving children from the economic pres¬ 
sure which tends to push them into industry at an early age. 

Forty-three states have passed legislation limiting the number 
of hours per day or per week a woman wage worker may be 
permitted to work. The five states which have neglected to pass 
legislation of this type are Alabama, Florida, Indiana, Iowa, 
and West Virginia. At least ten states, the District of Colum¬ 
bia, and Porto Rico have enacted eight-hour laws for women 
workers; several of these states, however, permit a seven-day 
week. Other states which allow nine or ten as a maximum per 
day, limit the working week to 48, 50, or 54 hours. Ohio, for 
example, fixes nine hours per day, except Saturday, and fifty 


LABOR LEGISLATION 


371 

hours per week as a maximum. About one-third of the states 
prohibit some forms of night work in the case of women wage 
workers. In most states, such legislation is limited to specific 
employment instead of including all gainfully employed women. 

The chief decisions relating to the regulation of women wage 
workers are as follows. In 1876 Massachusetts sustained a ten- 
hour law. In 1902 a ten-hour statute applying to women workers 
was declared constitutional in Nebraska and in Washington. In 
1906 the Oregon ten-hour law was upheld in the state courts; 
and two years later by the United States Supreme Court.' In 1910 
a statute modeled after that of Oregon was sustained in Illinois, 
thus reversing an earlier decision in regard to an eight-hour law 
for women wage earners. In 1909 an inferior court in Michigan 
declared a nine-hour law of that state unconstitutional in so far 
as it related to women workers. The act was held to be a form 
of class legislation because an exception was made in favor of the 
canning establishments of the state. The Supreme Court of the 
state in 1910 declared the law to be constitutional. In 1907 the 
New York statute prohibiting the night work of women wage work¬ 
ers was declared unconstitutional by the state courts. Another law 
was enacted in 1913 and sustained in 1915. In 1924 the Supreme 
Court of the United States declared constitutional a New York law 
forbidding night work for women in restaurants. 

The most important case in regard to the limitation of the work¬ 
ing hours for gainfully employed women was the Oregon laundry 
case before the Supreme Court of the United States in 1908. 
The constitutionality of a law restricting the hours of labor for 
female employees was upheld. Louis D. Brandeis, now on the 
supreme bench, was the lawyer chiefly responsible for the brief 
in the case. It was almost entirely devoted to a careful and pains¬ 
taking presentation of the evil effects of a long working day upon 
the health of women — the mothers of the race. The appeal did not 
rest so much upon legal precedent as upon the evils which result 
from long-continued work of women in factories, stores, and laun¬ 
dries. The presentation was convincing and the law was sustained 
as being a legitimate and desirable exercise of the police power of 
the state. 

In cases of this type the employers are often insistent upon 
pointing out that a law limiting the working day or week inter- 


372 


LABOR PROBLEMS 


feres with the worker’s freedom of contract. Is it not peculiar 
and significant that associations of employers should suddenly be¬ 
come so solicitous of the rights of their female employees that 
they will fight this and similar legislation? Years ago the National 
Women’s Trade Union League declared for an eight-hour day. 
Its members evidently are not afraid of any loss of freedom as 
a consequence of such legislation. This question is a pertinent one: 
Are these anxious employers actuated by humane or selfish mo¬ 
tives? Since women have been allowed to vote, it has been argued 
by certain groups of middle-class women that no special legislation 
favoring the working-class woman should be passed. Women 
and men workers should be treated alike, it is urged, in the matter 
of labor legislation. 

Protective laws in regard to adult male workers have encountered 
many difficulties in running the gantlet of constitutionality. The 
courts do not assume the same attitude toward an attempt of 
organized labor to obtain an eight-hour day that they do toward 
an attempt on the part of aggregated capital — a corporation — to 
acquire property. The right to daily leisure is not legally safe¬ 
guarded so securely as is the right to acquire and control property. 
It is a phase of the old question of the relative rights of capital and 
of horny-handed men. A text-book in ethics has stated the case 
clearly and accurately. The “legal attitude toward pressure exerted 
by business corporations for the familiar end of acquisition” is very 
different from that toward pressure “exerted by the union for the 
novel end of a standard of living” — that is, for a shorter working 
day. The courts have recognized the danger of long working days 
in the case of mothers and future mothers; and they are beginning 
to understand that the general welfare also demands healthy fathers 
who are not overworked. The good citizen and the good father 
must have a reasonable amount of leisure each day. Man is more 
than a mere working, eating, and sleeping animal or machine. 
Legal recognition is being given to these self-evident truths. 

Laws regulating the hours of labor of adult male workers may 
be divided into three classes: for public works, dangerous and 
unhealthful occupations, and other industries. Over one-half of 
the states and the federal government have passed laws fixing the 
working day for public employees at eight hours. The federal 
statute of 1892 established an eight-hour day for employees on 


LABOR LEGISLATION 


373 


all governmental work; but interpretation by the courts and by 
federal officials was to the effect that the law did not apply to 
governmental work let out to private contractors. The act of 
1912 provided that an eight-hour clause must be inserted in all 
contracts made by the federal government involving the work of 
mechanics and laborers. 1 Many cities have eight-hour provisions 
in their charters or have enacted eight-hour ordinances covering 
municipal work of various kinds. The second class of laws relates 
to employees in mines, smelters, laundries, and other more or less 
dangerous and unhealthful workplaces. 

At least a dozen states limit the hours of labor in mines and 
smelters to eight per day. New York, New Jersey, Pennsylvania, 
and Massachusetts limit according to a sliding scale the maximum 
working hours per day for workers subjected to the pressure of 
compressed air in tunnels. The higher the pressure, the shorter 
is the length of the working day legally allowed. Several states 
have also passed laws regulating the hours of labor for adult males 
in one or more industries held by the legislators to be dangerous 
or unhealthful. A majority of the states and the federal government 
have passed legislation regulating the hours of labor of employees 
on railways, and over ten states have passed similar laws in regard 
to street railway employees. These regulations are intended pri¬ 
marily to protect the traveling public; but the protection of the 
employee is also an important consideration. For this reason and 
because the railway business is quasi-public in character, these 
laws constitute a valid exercise of the police power of the state. 
The Adamson law, passed by Congress in 1916 in order to prevent a 
railway strike, established eight hours as the basic working day for 
railway employees engaged in interstate traffic. The law has acted 
as a wage-fixing device rather than as a measure determining the 
actual length of the working day. Lastly, two states, Mississippi 
and Oregon, have passed statutes limiting the hours of adult male 
workers to ten hours per day in factory employment. 2 Each law con¬ 
tains a clause granting exceptions in cases of emergency. The Ore¬ 
gon act provides that the overtime in cases of emergency may not 
exceed three hours and shall be remunerated at the rate of “time 

1 A few exceptions were allowed and provisions were made for emergencies. 

2 North Carolina has an eleven-hour law on the statute books. It applies, 
with exceptions, to all male factory workers. 


374 


LABOR PROBLEMS 


and one-half.” This statute specifically states that it was passed 
for the purpose of promoting the general welfare. Several states 
have passed laws determining the length of the working day in ordi¬ 
nary occupations in the absence of a special contract. The constitu¬ 
tionality of such statutes is not in doubt; but they are ineffectual. 

In order that the real status of protective legislation for adult 
male workers may be definitely presented, a brief statement must 
be made of four important decisions of the United States Supreme 
Court. These decisions relate to laws limiting the working hours 
of adult male workers in specific industries. In Atkins vs. The 
People, 1 October, 1903, the Supreme Court sustained the right of 
the state to provide by statute for a working day of eight hours 
for the employees of a state, a county, or a municipality within 
the state. The law may relate to work done directly for the state, 
or indirectly through contractors. This decision does not rest 
upon an enlargement of the police power of the state. The question 
of healthfulness or unhealthfulness of a particular occupation did 
not enter. The decision rested upon the broad basis that the state 
had the right to prescribe the conditions under which services 
might be performed for it. 

In the famous case of Holden vs. Hardy (the Utah eight-hour 
case, 1898) 2 the United States Supreme Court upheld the Utah 
act which limited the length of employment of workmen in all 
underground mining work to eight hours per day, except in cases 
of emergency. The right to leisure in occupations distinctly dan¬ 
gerous to health or limb was recognized. Prior to this decision 
state supreme courts, following the 1895 decision of the Illinois 
Supreme Court, had held that laws limiting the working hours 
of females, and consequently of males, were in contravention of 
the fourteenth amendment to the United States Constitution. 
The courts of the states had been limiting the right of the state 
legislatures to pass laws protecting employees. The Utah case 
strengthened the power of the state legislatures. However, this 
decision is not binding upon state courts. 

In the case of Lochner vs. New York (the bakers’ case) 3 the 
New York statute forbidding the employment of wage earners in 

1 Bulletin of the Bureau of Labor, No. 50, pp. 177-181. 

2 Ibid., No. 17, pp. 625-637. 

3 Ibid., Nos. 57 and 59. 


LABOR LEGISLATION 


375 


bakeries and confectionery establishments for more than ten hours 
daily was declared null and void by the decision of five judges; 
four dissented from the majority opinion. The New York Court 
of Appeals had, by a divided decision, upheld the law as a reason¬ 
able health regulation, and, therefore, as coming within the police 
power of the state. The adverse decision of the United States 
Supreme Court seems to have hinged upon the question as to the 
healthfulness or unhealthfulness of employment in bakeries. If 
unhealthful, the matter of the restriction of the hours of labor came 
within the legitimate sphere of the police power of the state. If not 
distinctly unhealthful, the law interfered with the freedom of con¬ 
tract. In this case the majority of the Court decided that the limit 
had been passed. It seems quite possible, even probable, that if 
the attorneys for the state had followed the course later taken in 
the Oregon case, if they had presented to the Court definite and con¬ 
crete facts and statistics in regard to the unhealthful conditions in 
the baking industry, the case might have been decided differently. 

The Lochner case illustrates in a remarkable fashion the diffi¬ 
culties which judges experience in deciding how far the police power 
may be extended and to what degree the older notion of freedom 
of contract may be modified. An employer, Lochner, was tried 
in a city court for violating the ten-hour law. Since Lochner was 
found guilty, the law must have been upheld by the judge as con¬ 
stitutional. The case was appealed to an appellate court of five 
judges. By a three to two decision, the constitutionality of the 
law was upheld. In an appeal to the highest court in New York, 
the State Court of Appeals, the law was again upheld by a vote 
of four to three. Finally appeal was made to the United States 
Supreme Court composed of nine judges. The highest tribunal in 
regard to the constitutionality of a state law under the federal 
Constitution, declared the law unconstitutional. In the progress 
of the case from the local court to the United States Supreme 
Court, twelve judges held the law to be constitutional and ten 
unconstitutional; but five of the ten were a majority of the highest 
legal tribunal in the nation. Over a score of labor cases ki which 
the constitutionality of a labor law was involved have been decided 
in the United States Supreme Court by a vote of five to four or 
four to four. 1 

1 Bulletin of the Bureau of Labor Statistics , No. 321. 


LABOR PROBLEMS 


376 

Finally, in April, 1917, the Supreme Court upheld the Oregon 
law limiting the hours of adult factory workers to ten per day, 
except in emergencies. 1 The clause providing for the payment of 
wages equal to time and one-half in case of overtime was held to 
be in the nature of a mild penalty for employers who worked their 
men longer than the maximum specified in the law. The Court 
did not refer to the bakers’ case; but the Supreme Court of 
Mississippi in upholding the Mississippi ten-hour law held that the 
decision in the bakers’ case did not apply because the New York 
law made no provisions for emergencies. The Mississippi law, 
like the Oregon act, made such provisions. 2 

From these decisions of the Supreme Court of the United States, 
the following conclusions may be drawn in regard to the consti¬ 
tutionality of laws limiting the length of the working day of adult 
employees: (1) The state legislature may determine the length 
of the working day in the case of work done directly or through 
contractors for the state, county, or municipality. (2) As a health 
measure, the state legislature may limit the working day to ten 
hours in any occupation, providing, at least, that exceptions are 
made in case of emergencies. 3 The attitude of organized labor is 
unfavorable to legislation limiting the working day of adults. 
Unionists are in favor of getting a shorter working day by union 
action rather than by the decree of a state legislature. Therefore, 
it seems not improbable that few laws limiting the length of the 
working day will be passed in industrial states — although it now 
appears quite clear that such laws will run the gantlet of the 
courts. 4 The depression and the insistent demand for a short 
working day or week may modify the attitude of organized labor. 

Laws providing for one day of rest in every seven are on the 
statute books of several states. Such laws allow the continuous 
operation of certain industries which Sunday-rest laws would not 
permit. “ Until 1915 the American seaman was kept in a condition 

1 Bunting vs. Oregon, 37, Supreme Court Reporter, p. 435; Bulletin of the Bu¬ 
reau of Labor Statistics, No. 224, p. 160. 

2 Bulletin of the Bureau of Labor Statistics, No. 112, pp. 112 ff. 

3 An Alaskan law, providing for an eight-hour day for all workers, was 
declared unconstitutional in 1918 by a federal circuit court. The case was 
not appealed. See Commons, J. R., and Andrews, J. B., Principles of Labor 
Legislation, rev. ed., p. 286. 

4 Carlton, F. T., Organized Labor in American History, pp. 253-265. 


LABOR LEGISLATION 


377 


of semi-slavery through employment under a contract which was 
enforceable by imprisonment.” After a long agitation, Congress 
in 1915 passed an act which allows seamen to leave a vessel when 
a safe port is reached and abolishes the danger of imprisonment for 
leaving the ship. The act also provided for better working and 
living conditions on board American vessels. A variety of laws 
for the purpose of giving labor relief from harmful coercion on 
the part of the employer have filled the statute books of our states. 
Laws providing for the time and place of paying wages, laws 
prohibiting enforced dealing at company stores and the truck pay¬ 
ment of wages, and laws in regard to deductions from wages are 
on the statute books of various states. Nearly all states make 
the wage earner a preferred creditor and also exempt his wages 
to the amount of fifty dollars or one hundred dollars or to one 
month’s earnings from attachment for debt. 

State laws have been passed for the purpose of preventing dis¬ 
crimination against union men in regard to either employment or 
discharge. As a rule, such laws have been held to be unconstitu¬ 
tional. A United States statute which declared it unlawful for 
interstate carriers to discharge employees because of membership in 
a union was held to be null and void by the Supreme Court of the 
United States. “ Congress could not, consistently with the Fifth 
Amendment,” said the Court, “make it a crime against the United 
States to discharge the employee because of his being a member of a 
labor organization.” Six judges concurred, two dissented, and one 
did not participate in the decision. A point made in the dissenting 
opinion of Justice Holmes is worthy of notice as indicating the 
possibility of a modification in judicial opinion. The Justice said 
that he could “not pronounce it unwarranted if Congress should 
decide that to foster a strong union was for the best interest, not 
only of the men, but of the railroads and the country at large.” 
This clearly foreshadows an important extension of the police 
power. 1 However, seven years later, in 1915, the Supreme Court 
held unconstitutional a Kansas statute which declared that an 
employer might not lawfully require an employee not to join a 
labor organization during his term of service. The act was held 
to be an unwarranted interference with freedom of contract. A 
decision rendered in 1930 by the Supreme Court may possibly con- 
1 Groat, G. G., Yale Review, Vol. 19, pp. 144-158. 


LABOR PROBLEMS 


378 

stitute a reversal of these two cases. 1 By a unanimous decision 
(8 to o) the Court held that a railway could be restrained from 
influencing or coercing its employees into withdrawing from a 
union and joining a company union or an employee representation 
group. The Railway Labor Act of 1926 provided that employees 
of railways might choose their representatives in collective bar¬ 
gaining without interference from the management of the railways. 
A few states now have on their statute books “ yellow dog contract” 
laws. The federal anti-injunction act of 1932 contains a “yellow 
dog” clause. A “yellow dog contract ” is one in which the employer 
requires the employee to sign a statement declaring (1) that the 
latter is not a member of a union and (2) that he will not join a 
union while in his present employment. The recent legislation 
declares such contracts to be null and void. Sooner or later a test 
case will reach the Supreme Court of the United States. The 
attitude of the Court in the railway case of 1930 may foreshadow 
a favorable attitude toward the “yellow dog” law. 

As was foreshadowed in a preceding section, the conclusion to be 
drawn from this brief study of the judicial attitude toward labor 
legislation is that in the future broad social and racial considera¬ 
tions rather than narrow legal technicalities will be of greatest 
importance in weighing the merits and demerits of labor legis¬ 
lation. 2 The crucial question will not be — Does a given piece of 
legislation interfere with the traditional freedom of contract? It 
will be — Does or does not the law under consideration tend to 
improve the health, stamina, and efficiency of workers, present and 
future? This is a fairly definite criterion. Careful studies of 
industrial accidents, of industrial hygiene, and of the efficiency 
of workers under different working conditions are needed; and 
the testimony should be furnished by the medical and economic 
experts and by students of comparative legislation. Accurate, un¬ 
colored, and widely disseminated information as to present-day 
conditions is demanded. 

THE MINIMUM WAGE 

A minimum wage law is not necessarily a piece of radical legisla¬ 
tion; it is in reality a conservative measure. Minimum wage 

1 Berman, E., American Economic Review , Dec., 1930, pp. 619 ff. 

2 The minimum wage law decision of 1923 runs counter to this conclusion. 


LABOR LEGISLATION 


379 


legislation recognizes and aims to continue the present industrial 
regime. Where monopoly has replaced competition, minimum wage 
laws merely curb the power of the monopolist to reduce wages. 
In industries in which competition still obtains, such legislation 
modifies the plane of competition, thus directly affecting both 
employers and employees. The unscrupulous or inefficient “twen¬ 
tieth man” among business men will lose part of his power to force 
low wages and poor working conditions upon the entire industry 
regardless of the attitude and desires of the other employers. And 
the low-standard-of-living wage worker will lose a portion of his 
advantage in competition with those demanding a somewhat higher 
standard. New rules are introduced by minimum wage legislation 
according to which the competitive game must be played. Certain 
practices now enter the category in which are found “hitting below 
the belt” and “spiking the runner.” The conditions under which 
competition and wage bargaining take place are changed, and the 
lower wage limit is artificially prevented from falling below a wage 
which will prevent the deterioration of the stamina and efficiency 
of the workers as a class. Like laws designed to stop the adultera¬ 
tion of food products, a minimum wage law will prevent “unfair” 
competition. Such legislation will aid the more progressive and 
humane type of employers by prohibiting the employment, by un¬ 
scrupulous employers, of labor under parasitic conditions. 

The representatives at the meeting of the International Associa¬ 
tion for Labor Legislation held at Lucerne in September, 1908, 
recognizing low wages as the fundamental cause of sweat-shop 
evils, urged that steps be taken to establish a minimum wage for 
weak and unprotected classes of labor. In 1909 the British Parlia¬ 
ment passed an anti-sweating act which became a law in September 
of that year. The law provided for boards with power to fix mini¬ 
mum wages in certain industries. Penalties were provided for em¬ 
ployers disregarding the findings of the board. Employers and 
employees were represented upon the boards. Separate boards 
may be established for each trade or branch of a trade or industry. 
At first, boards were established in only four industries — whole¬ 
sale tailoring, cardboard box making, lace finishing, and chain 
making. Under the law, a board is expected to study the conditions 
in the industry for which it is appointed, and to fix minimum wages 
for both day and piece work. The Board of Trade may extend, 


38° 


LABOR PROBLEMS 


provided Parliament consents, the provisions of the law to other 
industries. Although Parliament sanctioned the principle of the 
minimum wage, it definitely maintained control over the extension 
of its application. In 1912, the coal mining industry was placed 
under the provisions of the act. In 1913, the law was applied to 
four additional trades, and afterward it was extended to cover 
agricultural workers. From time to time additional occupations 
were included, until “practically all of the important industries 
employing women and children in Great Britain had been brought 
under the Trade Boards Act.” In 1915, France enacted a minimum 
wage law applying to women in certain clothing industries. The 
most famous attempt at establishing minimum wages by law has 
been made in Victoria. The law was first passed in 1896, and has 
been amended at various times. Minimum wage boards are in 
operation in a large number of trades and their findings affect a 
considerable percentage of the wage workers of Victoria. Other 
states in Australia have minimum wage laws closely correlated 
with legislation for compulsory arbitration. 

In Victoria, “the two chief objections made to the law have 
been (1) that it was unjust to the old and slow worker, and that 
when conditions of competition make it worthwhile it creates a 
body of unemployed whose interest it is to evade the law, and 
(2) that it has a detrimental effect upon industries. Those who 
support the law maintain ( a ) that it has practically done away with 
sweating and has been an influence in favor of higher wages, ( b ) that 
it has not affected industries unfavorably, and (c) that it has been 
influential in preventing industrial conflicts between workers and 
their employers.” 1 

The minimum wage boards of Victoria and Great Britain were 
legalized in response to sentiment opposed to the sweatshop. 
Theoretically, the sanction for minimum wage boards and the 
sanction for boards of arbitration are quite different. The latter 
are means of obtaining and preserving industrial peace. The former 
rest upon the principle that social progress is retarded when workers 
are paid wages which are so low as to render it impossible for them 
to maintain themselves and family in an adequate and decent 
manner. Or, in other words, the lawmakers recognize that a 
parasitic trade is a menace to the well-being of any community. 

1 Clark, V., Bulletin of the Bureau of Labor, No. 56, p. 67. 


LABOR LEGISLATION 


38i 

No direct effort is made to prevent strikes or lockouts. In actual 
practice, however, minimum wage boards and courts of industrial 
arbitration accomplish almost the same ends. Possibly, fixing 
the maximum number of hours to be worked per week and per 
year may be a better and more practical method of attacking the 
sweated industries. 

In the United States, no attempt has been made to apply a 
minimum wage law to adult male workers. The first American 
state to pass a minimum wage law was Massachusetts. This act 
was passed in 1912 and went into effect in 1913. In the latter year, 
eight more states enacted similar legislation — California, Colorado, 
Minnesota, Nebraska, Oregon, Utah, Washington, and Wisconsin. 
Later Arizona, Arkansas, Kansas, North Dakota, Porto Rico, 
Texas, and South Dakota also placed minimum wage laws for 
women and children upon their statute books. The federal gov¬ 
ernment in 1918 enacted such legislation for the District of Colum¬ 
bia. Fifteen states, Porto Rico, and the District of Columbia 
have enacted minimum wage legislation. 

The laws are compulsory in all jurisdictions except in Massachu¬ 
setts and Nebraska. 1 In these two states, public opinion is de¬ 
pended upon to enforce the rulings of the commission. In Arizona, 
Arkansas, South Dakota, and Utah, the minimum rates are fixed 
by legislative action; in the remaining states a minimum wage 
commission or industrial welfare board, appointed by the governor, 
is given authority to fix minimum wages and, as a rule, also to 
determine other conditions in industries employing women and 
children. The commission may undertake an investigation itself 
and make a wage determination, or it may delegate this work to a 
subordinate wage board, reserving the right to accept or to modify 
the findings of the board. In nearly all the states the law ap¬ 
plies to all industries; but in Arizona, Arkansas, and Colorado 
certain industries are exempted from the operation of the law. 

The principle of minimum wage determination is that of the 
living wage. In California, it is the “necessary cost of proper 
living”; in Oregon and Washington, the necessary cost of living; 
in Colorado, Massachusetts, and Nebraska, the cost of living and 
the financial condition of the business. The National War Labor 
Board adopted the following principle: “In fixing wages, mini- 
1 The Nebraska law was repealed in 1919. 


3 82 


LABOR PROBLEMS 


mum rates of pay shall be established which will insure the sub¬ 
sistence of the worker and his family in health and reasonable 
comfort.” The constitutionality of a compulsory minimum wage 
law applying to women and children was upheld by the Supreme 
Court of the United States in 1917. The vote was four to four; 
one justice took no part in the decision. Several state courts 
rendered decisions favorable to the constitutionality of a minimum 
wage law for women and children. In 1923, however, by a vote 
of five to three, the Supreme Court declared unconstitutional the 
law passed by Congress for the District of Columbia. In the 
majority decision, it was argued that the law constituted an 
infringement of the freedom of contract, and that it was not on 
a par with laws fixing a maximum working day. It was also stated 
that the constitutional amendment giving women the ballot equal¬ 
ized the bargaining power of men and women. 1 A state minimum 
wage law was later declared unconstitutional, the court holding 
it was bound by the decision in the District of Columbia case. 

As the result of these two court decisions, all the mandatory 
state laws are no longer enforceable in so far as they affect women. 2 
As it is not mandatory, the Massachusetts law was not affected 
by these decisions. In so far as the minimum wage laws relate 
to children, they are still enforceable. Evidently, in the opinion 
of the majority of the Supreme Court justices, the wage contract 
is for some reason more sacred than a contract in regard to hours 
of labor. A statute fixing a maximum number of hours in a 
woman’s working day is constitutional; but one determining a 
legal minimum wage is not. It is difficult for the layman in legal 
matters to agree with this reasoning. Chief Justice Taft and 
Justice Holmes could not agree that a constitutional amendment 
practically equalized the bargaining strength of men and women 
workers. It might, however, be pointed out that the slow spread 
of minimum wage legislation compared with that of workingmen’s 
compensation laws in the United States indicated that the Ameri¬ 
can people did not consider the former a very important or especially 
desirable type of legislation. Organized labor in this country has 
not manifested much interest in the matter. 

1 Commons, J. R., and Andrews, J. B., Principles of Labor Legislation , 
pp. 227-229; Berman, E., Journal of Political Economy , Vol. 31, pp. 852-856. 

2 In 1932 eight states had mandatory minimum wage laws on their statute 
books. 


LABOR LEGISLATION 


383 


REFERENCES 

Atkins, W. E., and Lasswell, H., Labor Attitudes and Problems, Chaps. 
10 and 11 

Berman, E., Labor and the Sherman Act 
Blum, S., Labor Economics, Chaps. 2-6 

Commons, J. R., and Andrews, J. B., Principles of Labor Legislation 

Frankfurter, F., and Greene, N., The Labor Injunction 

Freund, E., The Police Power 

Mason, A. T., Organized Labor and the Law 

American Labor Legislation Review 

Bulletin of the Bureau of Labor Statistics (Court Decisions) 

Law and Labor 


CHAPTER XXII 

SOCIAL INSURANCE 

THE AMERICAN POINT OP VIEW 

The traditional American notion has been that insurance is a 
private matter. Only in recent years has the idea spread that it 
might be a matter of community concern. The four contingencies 
confronting industrial workers against which it is proposed to 
insure as the result of legislative action are: industrial accidents, 
sickness, old age and invalidity, and unemployment. The Ameri¬ 
can states have quite generally accepted the first form as desirable; 
but favorable opinion in regard to the others has not developed 
sufficiently to lead to much legislative activity. Social insurance 
is compulsory, governmentally regulated insurance against the 
above-mentioned contingencies. 

Pleas for compulsory health insurance, for old age pensions, or for 
unemployment insurance are still met by the old cry of paternalism. 
Individual savings accounts or voluntary insurance are pointed to 
as the proper methods of providing for sickness, old age, and un¬ 
employment. Our industrial and political leaders are dominated 
by the individualistic optimism of the so-called “self-made” man 
who completely overlooks the fact that revolutionary changes have 
occurred within the space of one or two generations. Our wealthy 
and “self-made” men have repeated over and over to the rising 
generation, and especially to the wage workers, the somewhat 
mythical story of their start in life. A graphic account is given 
of the way in which the first dollar was earned. Frugality and 
the saving of pennies are the magic passwords. Viewed in the 
colored light of such testimony, the idea of compulsory insurance 
and non-contributory pensions looks utopian and dangerous. It 
would appear that social insurance would inevitably destroy self- 
reliance and make the worker a weakling. If, however, a more 
searching examination is made of the careers of these self-made 

384 


SOCIAL INSURANCE 385 

men, it is usually discovered that the exploitation of natural re¬ 
sources and the ownership of 'Valuable patents, privileges, or fran¬ 
chises, rather than mere frugality, furnished the basis of their 
economic prosperity. Today by mere frugality and saving neither 
the wage worker nor the average salaried man can hope to become 
moderately well-to-do. Multitudes of families in this country do 
not receive sufficient income to warrant any attempt to save for 
old age or for a “rainy day.” In an epoch of small-scale industry, 
when competition was active and the capillarity of classes consid¬ 
erable, an old age pension scheme might and probably would have 
discouraged thrift and foresight. But today, in an advanced in¬ 
dustrial nation, the conditions of industrial life, including the 
swings of the business cycle, and the increasing immobility of 
classes are such as to discourage individual frugality and saving. 
Under such conditions, the validity of the argument that non¬ 
contributory social insurance plans will discourage thrift and fore¬ 
sight may be questioned. 

Sickness, unemployment, and old age are prolific causes of de¬ 
pendency. The arguments in favor of a system of compensation 
for industrial accidents as a desirable and humane method of re¬ 
ducing the amount of want, suffering, and need of charitable aid 
also apply in the case of other forms of social insurance. If wage 
workers cannot, without an undesirable lowering of their standards 
of living, save enough to provide for periods of sickness and 
unemployment and for old age, surely the government ought to 
relieve or prevent the distress by some more adequate and humane 
means than the poorhouse or the “dole.” Social insurance may 
reduce individual initiative — although it may be questioned 
whether placing small sums at occasional intervals in a^ savings 
bank is very effective in stimulating individual initiative — but 
it certainly will promote the well-being of wage workers. The stern 
dread of an uncertain future will be replaced by a feeling of se¬ 
curity. It is sometimes urged that pensioning and insuring workers 
against the various contingencies of industrial life will lead to 
unwise and harmful expenditure of present income. A hundred' 
years ago Randolph argued against the establishment of free schools 
in Virginia for similar reasons. The. day of rugged individualism 
of the frontier type is of the past. Our eyes should be turned to¬ 
ward the future which is bringing with it greater and greater need 


3 86 


LABOR PROBLEMS 


for coordination and a wide field for group activities. Furthermore, 
uncertainty as to the future and the fear of unemployment often 
lead wage workers to spend their incomes recklessly. 

employers’ liability eor industrial accidents 

The common law relating to employers’ liability developed be¬ 
fore the workingmen were granted the ballot and while industry 
was in a simple and decentralized form. According to the old 
common law doctrine the determination of the liability for accidents 
in industry centered around the problem of fixing the responsibility 
for injury upon some definite individual — the injured workman 
himself, a fellow worker, or the employer. It is grounded upon 
the individualism of the eighteenth century. The doctrine may not 
have been palpably unfair to the employee in the days of the small 
shop and of the hand tool, but in the era of factories and railways, 
and of complicated and articulated machinery, the common law 
doctrine of employers’ liability fails to deal adequately and justly 
with the injured worker and his family. 

Under the common law the employer is required to provide 
“reasonably” safe machinery placed in a “reasonably” safe work¬ 
shop and operated by “reasonably” careful workmen. In short, 
the employer must exercise “ordinary care.” The employer is 
held responsible for the injury of a workman only in case he or 
his vice-principal has been guilty of negligence. But employers 
are not considered to be responsible for the danger connected 
with the occupation; the occupational risk is held to be assumed 
by the worker upon entering the service of his employer. As a 
matter of fact, the injured employee finds it difficult under em¬ 
ployers’ liability to compel the employer to pay adequate compen¬ 
sation in a large percentage of cases. Three important defenses 
complicate the matter and weaken the case of the injured worker 
— the fellow servant doctrine, the doctrine of contributory neg¬ 
ligence, and the doctrine of the assumption of risk. By appeal 
to one or more of these defenses, the burden is often placed upon 
the shoulders of the worker and his family instead of becoming 
one of the expenses of the business. 

The fellow servant doctrine was not early introduced into English 
and American law; and it is not found in other legal systems. 


SOCIAL INSURANCE 


387 

According to this doctrine the employer is released from his 
liability for the negligence of his agent, provided the injured worker 
is a fellow employee. In case of a small employer or a small work¬ 
shop it is not difficult to determine what constitutes common 
employment; but in large industries the matter is not simple. 
Are the locomotive engineers and the switchmen fellow servants? 
Are the man who operates the elevator and the tool-maker fellow 
servants? Theoretically, relieving the employer from responsi¬ 
bility for the negligence of a co-worker is supposed to prevent 
accidents due to the carelessness of fellow servants. The worker 
in a small shop could demand and obtain the elimination of the 
careless fellow worker; but in large-scale industry an employee 
may be injured as the result of the negligence of another employee 
who may be unknown to the injured person. Yet, under a strict 
interpretation of the law these men may be judged to be fellow 
servants. The locomotive engineer has practically no means of 
ascertaining the carefulness or carelessness of a given switchman; 
yet the life of the former may frequently depend upon the effi¬ 
ciency of the switchman. Again, an injury may be due to the 
carelessness of fellow servants, but it may be impracticable to 
trace such carelessness to any one individual. Lastly, even if the 
responsibility for an injury can be definitely traced to a fellow 
worker, the legal right to hold him responsible is often of little 
or no practical importance. Wage workers are too frequently 
financially irresponsible. The net result of the fellow servant 
defense is to place the burden upon the injured man and his 
family in many cases where he has not been negligent. The courts 
have, in certain instances, manifested a tendency to modify the 
fellow servant doctrine by introducing what has been called “the 
departmental doctrine.” An attempt was made to stretch the law 
to fit modern conditions by classifying employees. According to 
this doctrine employees in different departments of a large industry 
are not classified as fellow servants in the legal sense. Here again 
the difficulty of drawing a sharp line of demarcation often appears. 

The doctrine of contributory negligence places all the legal 
responsibility for an injury upon the disabled person, providing 
that individual is partially to blame for the accident. In a few 
cases the courts have attempted to remedy the evident injustice 
of this defense by formulating a doctrine of comparative negli- 


LABOR PROBLEMS 


388 

gence. In such cases the court has endeavored equitably to ap¬ 
portion the responsibility for an accident. 

The courts are inclined to assume that the employee has fairly 
definite knowledge of the ordinary risks in his particular trade or 
occupation; consequently, it is frequently held that the worker 
assumes the occupational risk connected with his work. Again, 
notwithstanding laws requiring the employers of labor to provide 
a safe workshop, and tools and machines which are not defective, 
some courts have held that if the employee knew of negligence or 
of defects in the machinery or tools used by him, and did not 
notify his superiors of such negligence or defects, he could not 
hold the employer responsible for injuries received. Furthermore, 
if the employee did call the attention of his employer to the 
defect and the latter neglected to remedy it, continuance at work 
has been considered by some courts as evidence of the assumption 
of the risk. Under the unmodified common law a workman might 
sign, under pressure of the necessity of obtaining a job, a legally 
valid contract releasing the employer from all responsibility for 
accidents. In the case of a mining company each employee was 
expected to sign a contract stating that he was a “ thoroughly 
competent and experienced workman” in the line of work in which 
he was engaged. The worker agreed carefully to examine practi¬ 
cally all the equipment and appurtenances of the mine before 
exposing himself to the dangers in mining. In order to live up 
to the terms of this contract it was necessary for each worker to 
spend no inconsiderable amount of time each working day in 
ascertaining the exact condition of the equipment of the mine; 
and, if he actually carried out his part of the agreement, doubtless 
his discharge would follow. 

Under the system of employers’ liability, unless an agreement 
can be reached out of court, the only recourse left the injured 
workman is to bring suit against his employer. In either case 
the employee is at a disadvantage. His immediate necessities 
are pressing, and the ultimate outcome of a lawsuit is very un¬ 
certain. With the enlargement of the industrial unit and the con¬ 
sequent disappearance of the personal nexus between the employer 
and the employee, injuries to employees became more frequent 
and “enterprising lawyers who had no regard for the traditions 
of the profession began to promote lawsuits by the injured parties 


SOCIAL INSURANCE 


389 

upon an agreement for fees contingent on success.” On the other 
hand, the harassed employer soon found relief from recurrent 
litigation by insuring in liability insurance companies. For a 
definite annual payment the burden of defending suits in injury 
cases was shouldered by the liability company; the insurance 
company also assumed the responsibility for all payments made 
to the injured employees. Skilled lawyers were employed for the 
purpose of defending the company. Thus another link was added 
in the chain between the injured workers and the parties responsible 
for the payment of damages. The insurance companies are or¬ 
ganized primarily for profit; success for officers and lawyers means 
little or no compensation for the injured employees of the insuring 
industrial corporation. Under the liability system it is customary 
for employers to insure against damages in case of accidents which 
temporarily or permanently disable any of their employees. 

The system of employers’ liability does not work to the satis¬ 
faction of either the employer or the employee. (1) The system 
is not effective in reducing the number of accidents. (2) It is 
often difficult to prove negligence when negligence was actually 
the cause of the accident. (3) Legal redress is expensive, uncertain, 
and, when obtained, often long delayed and inadequate. A large 
percentage of the cost of the system is absorbed by lawyers and 
insurance companies; only a small fraction of the total cost to 
employers actually reaches the injured worker and his family. 
(4) The employers’ liability system tends to increase the friction 
between employers and employees. The lawyers of the liability 
company frequently use all available means to browbeat and de¬ 
feat the injured employee, and the latter inevitably feels that his 
employer is responsible for such treatment. Because of these de¬ 
fects, the employers’ liability system in the case of industrial 
accidents has been displaced by workingmen’s compensation. 

workingmen’s COMPENSATION ACTS 

The United States had the unenviable distinction of adhering 
to the theory of employers’ liability after nearly every other 
important industrial country had adopted some definite system 
of compensation for accidents to employees. For years we stretched 
and patched our antiquated scheme of employers’ liability, but it 


390 


LABOR PROBLEMS 


proved to be a vain endeavor. The system was inadequate, unjust, 
uneconomical, and it did not tend to reduce the frequency of in¬ 
dustrial accidents. By the end of the nineteenth century most 
of the European countries had passed compensation acts. In 
addition to definite and certain compensation in case of accident, 
provision had also been made before the opening of the World 
War in 1914, in all important industrial nations of Europe, for 
health insurance; and several countries provided for old age pen¬ 
sions. During the first decade of the century, public opinion in 
the United States rapidly crystallized in favor of the adoption of a 
system of workingmen’s compensation. Official commissions, un¬ 
official organizations, and students of social and industrial problems 
investigated. The American Association for Labor Legislation 
opened a vigorous campaign in favor of the compensation system. 
At first organized labor was somewhat skeptical about the merits 
of the system; and many business men were afraid of the disastrous 
effects of added business expenses. 

In 1902 Maryland passed the first American workingmen’s 
compensation law. The bill was badly drawn and it was soon 
declared unconstitutional; but the court did not consider the legal 
merits or demerits of a system of compensation for industrial 
accidents. In 1906 the United States Philippine Commission 
enacted a compensation law applicable to employees of the insular 
government. During disability because of injuries, wages were 
continued for a period not exceeding ninety days. In 1908 Con¬ 
gress passed a compensation measure which applied to certain 
laborers employed by the federal government. Subsequently, the 
scope of the law was extended, and in 1916 it was superseded by 
a well-drawn law covering civilian employees of the federal govern¬ 
ment. In 1909 the state of Montana passed a crude compensation 
act to cover injuries received by workers in coal mines. This law 
was declared unconstitutional on technical grounds. On Sep¬ 
tember 1, 1910, a compulsory act went into effect in New York 
which applied to a specified number of hazardous employments. 
In March, 1911, this act was declared unconstitutional by the 
New York Court of Appeals. 

The first permanent compensation acts became effective in 1911. 
In that year compensation acts were placed on the statute books 
of California, New Jersey, Washington, and Wisconsin. After 1911, 


SOCIAL INSURANCE 


391 


the enactment of such legislation was rapid; the compensation 
system apparently soon proved its desirability in actual practice. 
In January, 1932, forty-four states, the District of Columbia, 
Alaska, Porto Rico, Hawaii, and the Philippine Islands had work¬ 
ingmen’s compensation laws in force; the federal government 
protected all civilian employees of the United States, and the 
longshoremen and other harbor workers were protected by a fed¬ 
eral compensation law. Railway workers engaged in interstate 
commerce were not covered by compensation legislation; this 
class of workers were under a federal employers’ liability act. 
The four states which cling tenaciously to the antiquated em¬ 
ployers’ liability system are Arkansas, Florida, Mississippi, and 
South Carolina. These are Southern states without extensive 
industrial development. 

The advantages of the compensation system for industrial acci¬ 
dents are practically the obverse of the disadvantages of the 
system of employers’ liability. A good system (1) should guarantee, 
without the taint of charity, prompt and adequate compensation 
for injuries; (2) it should reduce the number of preventable 
accidents; (3) resort to the courts should be eliminated; (4) the 
extent of the employer’s liability should be very definitely fixed 
so that the probable expense can be estimated with a fair degree 
of accuracy; (5) a contract waiving the right to receive compensa¬ 
tion should be null and void; (6) the system should be carefully 
supervised by competent officials; and (7) provision should be 
made for re-training such workers as have been crippled by indus¬ 
trial accidents. 

Under the old liability system, some individual was assumed to 
be responsible for each and every accident — the employer, a 
fellow workman, or the injured person himself. Under working¬ 
men’s compensation, the burden of economic compensation in 
case of accident is placed, like fire insurance, among the expenses 
of business operation. This burden is reduced as the accident 
rate is lowered by the increased use of safety devices and by the 
greater emphasis upon carefulness. The prime test of a working¬ 
men’s compensation law is found in the reduction in the number of 
preventable accidents. There is good reason for asserting that 
in no small degree the stress upon “safety first” is the fruit of 
workingmen’s compensation legislation. A system of compensation 


392 


LABOR PROBLEMS 


for accidents makes it profitable to be humane and to protect 
employees; the old system of employers’ liability, with its burden 
of legal technicalities,' often made it seem profitable to be cruel, 
and careless and wasteful of human life and limb. Under an 
adequate workingmen’s compensation law, the firm having more 
accidents than it^ competitors will have an extra expense to bear. 
Such legislation is scientific; it is far better than coercive laws 
which aim to force the use of safety appliances by means of legal 
penalties. 

The constitutionality of a compulsory workingmen’s act was 
definitely established in two decisions rendered by the federal 
Supreme Court on March 6, 1917. In the first decision upholding 
the constitutionality of the New York compensation act of 1914, 
the Court held: “It is plain that, on grounds of natural justice, 
it is not unreasonable for the State, while relieving the employer 
from responsibility for damages measured by the common-law 
standards and payable in cases where he or those for whose conduct 
he is answerable are found to be at fault, to require him to contribute 
a reasonable amount, and according to a reasonable and definite 
scale, by way of compensation for the loss of earning power in¬ 
curred in the common enterprise, irrespective of the question of 
negligence, instead of leaving the entire loss to rest where it may 
chance to fall — that is, upon the injured employee or his de¬ 
pendents.” In the second decision in regard to the Washington 
act the Court indicated clearly that it was of the opinion that 
compulsory compensation acts constitute reasonable extensions of 
the police power. 1 

The compensation laws enacted in the various states differ 
greatly in regard to the benefits provided, the number of workmen 
covered by the legislation, the waiting period, the provisions for 
payment of the compensation award, and the administration of 
the system. In all except two states the amount of cash compen¬ 
sation is based upon the weekly wages paid. Certain states, how¬ 
ever, provide for lump-sum payments for specified injuries. As a 
rule a fixed percentage of the wage received, within a maximum 
and a minimum limit, is allowed for all injuries. In case of per¬ 
manent or partial disability or of death, the percentages vary from 
fifty in several states to seventy in Wisconsin. Sixty-six and two- 

1 Bulletin of the Bureau of Labor Statistics , No. 224, pp. 232 ff. and 252 ff. 


SOCIAL INSURANCE 


393 


thirds is the percentage used in fifteen states. For total disability, 
seventeen states and the federal government provide for the pay¬ 
ment of benefits during the continuance of disability. Other states 
fix a maximum number of weeks during which payments shall be 
made. The majority of the states provide for greater benefits 
in case of permanent total disability than in the case of a fatal 
accident. It is recognized that the family would suffer a greater 
economic loss if the breadwinner were permanently disabled than 
it does if he were killed outright. Provisions are also made for 
medical aid in addition to cash benefits. Progress has been made 
in recent years toward increasing the coverage or the percentage 
of the entire number of workers placed under the protection of 
the compensation laws. Farm laborers, domestic servants, and 
casual employees are, as a rule, excluded from the operation of the 
compensation laws. 

Except in Oregon and South Dakota, no compensation is paid 
for a definite period at the beginning of the disability. This 
“waiting period” is usually three to seven days; in seven states, 
the period is more than seven days. In certain states, payments 
are made for the waiting period, if the disability extends beyond a 
specified length. Four different methods are used in carrying the 
insurance provided under compensation laws: a state fund into 
which employing firms pay the required premiums; insurance in 
a private insurance company; insurance in a mutual insurance 
company; or the risk may be carried by the employing company. 
Eighteen states provide for a state fund; in seven of these states 
(minor exceptions in two) the state fund is exclusive of other 
methods. The American Association for Labor Legislation sug¬ 
gests that “sentiment is rapidly developing in favor” of the 
exclusive state fund. A responsible administrative body should 
be organized to see that the injured worker and his family receive 
the payments provided for in the law, that these payments are 
paid promptly, and that the necessity of litigation is removed. 
In seven states, Alaska, and the Philippine Islands, however, no 
provision is made for such an administrative body. 1 

The chief weaknesses of the compensation laws of American 

1 For a brief analysis of the compensation acts of American states, see 
Bulletin of the Bureau of Labor Statistics, No. 496, and the annual pamphlets 
issued by the American Association for Labor Legislation. 


394 


LABOR PROBLEMS 


states have been lack of uniformity, insufficient coverage, failure 
to include disability resulting from industrial or occupational 
diseases, and the lack of provision for vocational reeducation of 
disabled workers. Industrial diseases result from sudden changes 
of temperature in such plants as glass or iron and steel factories, 
extreme humidity of the shop atmosphere, abnormal air pressure, 
industrial poisons as in lead-working plants, and dust as in stone 
cutting or in the use of emery wheels. An industrial disease is as 
certainly an industrial hazard as is an industrial accident. The 
former is produced by small, oft-repeated, unnoticed injuries; the 
latter is more spectacular and is the result of one definite injury. 
The danger of contracting an industrial disease is, however, an 
occupational risk; and this risk may be reduced by preventive 
measures. All the arguments in favor of a compensation law 
for industrial accidents may logically be used in arguing for the 
coverage of industrial diseases. Ten states, Hawaii, the Philippines, 
Porto Rico, and the federal government have compensation laws 
which cover all or certain specified industrial diseases. Compensa¬ 
tion alone is not enough; it is highly desirable from the point of 
view of society, as well as from that of the injured worker and his 
family, that the permanently injured worker be so treated and 
re-trained as to allow him, if possible, again to become a wage 
worker. It may be necessary for him to learn a new trade or 
occupation. In 1920 federal aid was granted on the fifty-fifty 
basis to states carrying on rehabilitation work. Nearly all the 
states now make provision for the re-training of industrial cripples. 
Provisions should also be made for greater flexibility in awards 
in case of permanent disability; among the factors to be taken 
into consideration are the age and occupation of the injured em¬ 
ployee and the nature of the injury. 

HEALTH INSURANCE 

In 1932 nearly all the important European nations provided 
for some form of health insurance for industrial workers. In the 
United States, however, no state had adopted any form of health 
insurance. The desirability of such insurance has been urged 
upon several state legislatures. In 1919 a bill was introduced in 
the State Legislature of New York providing for health insurance. 
Prior to that time the American Association for Labor Legislation 


SOCIAL INSURANCE 


395 


had prepared a draft of a standard bill for compulsory health 
insurance. This proposed piece of legislation provided that forty 
per cent of the necessary premiums be paid by the insured employee, 
forty per cent by the employer, and the remaining twenty per 
cent by the state government. This triple form of payment was 
held to correspond roughly with the relative burden of responsibility 
for the sickness of the wage worker. The insurance was to be 
carried in one of three ways: (i) by a state fund; (2) by ap¬ 
proved societies or unions; or (3) by district mutual insurance 
associations. The benefits to be provided by insurance carriers 
were medical, surgical, and nursing attendance; funeral benefits; 
maternity benefits; and cash benefits. The cash benefit was to 
begin on the fourth day of illness; it was to be equal to two-thirds 
of the weekly wages of the insured; and it was not to be paid 
for more than thirteen weeks in any one year. The system was to 
be supervised by a state insurance commission. Provisions were 
made for varying the premium rates in accord with the sickness 
rate; and provisions were inserted for the purpose of securing 
competent and acceptable medical service. 

Sickness is a far more important cause of poverty and de¬ 
pendency than accidents; and much sickness is preventable. The 
primary purpose of health insurance should be to prevent sickness 
rather than to relieve the distress in the families of wage workers 
caused by the illness of the breadwinner. Scientific health legisla¬ 
tion will stress prevention rather than philanthropy; it will cause 
the employer, the employee, and the public generally to look 
upon sickness not merely as a personal misfortune but more 
particularly as an economic calamity in which the nation is vitally 
interested. A properly drawn health insurance act will make the 
reduction of the sickness rate financially desirable to both em¬ 
ployer and employee. After workingmen’s compensation acts 
went into effect, the services of safety experts were in demand; 
for similar reasons after the passage of health insurance acts the 
service of medical experts will be called for in order to eliminate 
much sickness and thus to reduce insurance rates. Instead of 
trying by means of coercive legislation to punish employers for 
insanitary and unhealthful conditions in their workplaces which 
will increase the sickness rate among their employees, let the 
plan of rewarding them for improving workshop conditions by 


LABOR PROBLEMS 


396 

lowering insurance rates be given a thorough trial. Such are the 
arguments advanced in support of compulsory health insurance. 
It is much more complicated than workingmen’s compensation. 
No state should enact a health insurance act without very careful 
and detailed study. For a decade or more there has been little or 
no agitation in the United States for compulsory health insurance. 


OLD AGE PENSIONS 

The extraordinary rapidity of industrial and social change in 
recent decades has endangered the economic security and dis¬ 
counted the worth of the counsels of the aged. The changes in 
the home and in family life, and the increase of urban living in 
relatively cramped quarters, have also made the aged less desirable 
members of households dominated by a younger generation. As 
a consequence, the dignity and security of age are being under¬ 
mined. The problem of pensions for the aged is a by-product of 
recent industrial transformations. In farming and in the simpler 
and less specialized and integrated processes of earlier industry, 
the aged worker could do his bit; but he often becomes a weak 
link in the chain of mass and highly specialized production. 

Provision for the old age of industrial workers may be made 
through charity, savings, insurance, or pensions. Charity is an 
undesirable and repulsive makeshift. For the great majority of 
workers receiving a low wage, voluntary saving or insurance 
sufficient to provide adequate maintenance after the work period 
is ended, is difficult of accomplishment. To the young, old age 
seems a distant and uncertain contingency; it does not seem suffi¬ 
ciently near to cause systematic saving. Adequate protection 
against want or charity in old age demands for the rank and file of 
industrial workers either an insurance or a pension plan. Such plans 
may be governmental (social) or private. Private plans, whether 
fostered by a labor organization or by an employing corporation, 
will not cover all workers. Many do not belong to labor organiza¬ 
tions, and up to date, few, if any, have adequate actuarially sound 
plans. Only a few corporations have developed a pension system 
for their workers; and, as a rule, such plans are not grounded 
on any definite contractual basis. Almost invariably the plan 
may be ended at any time by the employing firm. The conclusion 


SOCIAL INSURANCE 


397 


seems inevitable that any adequate old age pension or insurance 
scheme for industrial workers must be compulsory and govern- 
mentally directed. It has been estimated that about one-third 
of the persons sixty-five years of age or over in the United States 
are dependent upon charity or relatives; and the percentage of 
the old reported as gainfully employed is steadily declining. On 
the other hand, the average expectancy of life is increasing. 
Evidently, the solution of the problem of adequate financial pro¬ 
tection for the industrial worker from the menace of poverty and 
dependency in old age is too difficult for private initiative. Fur¬ 
thermore, the aged worker who is forced into the almshouse is 
considered to be an unworthy outcast. 

The United States, China, and India have the distinction of 
neglecting to adopt “any form of constructive care for the aged.” 
At least thirty-eight countries have adopted some form of old age 
pension or insurance for wage workers. Of this total, twenty-five 
use insurance or the contributory principle. Great Britain, Ger¬ 
many, and France are in this group. Contributions are made by 
employers, employees, and the state. In some countries in this 
group, the contributions are made by employers and employees 
without governmental subsidy. In twelve countries the pension 
or non-contributory plan is used. Australia, Canada, and Den¬ 
mark are in this group. Japan provides only for voluntary in¬ 
surance. When European countries first recognized the desirability 
of protection for the aged, plans for voluntary insurance were 
encouraged; but the futility of such schemes soon became evident. 1 

In the United States, the legislative enactment of old age pension 
laws began in Arizona in 1914. This act was badly drawn and was 
soon declared to be unconstitutional. The Territory of Alaska 
passed an old age pension law in 1915. The next laws were passed 
in 1923, in which year Montana, Nevada, and Pennsylvania adopted 
state systems of old age pensions. The Pennsylvania act was de¬ 
clared to be unconstitutional. At the end of 1931, seventeen 
states and Alaska had laws upon their statute books providing 
for non-contributory old age pension systems. Neither the em¬ 
ployer nor the employee is asked directly to contribute. The 
money to provide for the payment of pensions is raised by taxation. 
Of these seventeen state laws, ten are mandatory and state-wide 
1 Epstein, A., The Challenge of the Aged , pp. 295-298. 


LABOR PROBLEMS 


398 

and seven are optional with the counties. The federal government 
has not as yet passed legislation pensioning the veterans of industry. 
A federal law granting a subsidy in addition to the pension allowed 
by a state would doubtless hasten the general adoption and stand¬ 
ardization of state laws. Delaware bears the entire expense of 
old age pensions, and, in five states, the state bears a fraction of 
the expense; but in the remainder of the seventeen states the 
cost of old age pensions falls upon the local governmental units. 
The maximum amount of pension granted varies from $250 per 
year to $1.00 per day. In order to obtain the meager pensions 
allowed under the various state laws, the aged dependent must 
be a worthy citizen of sixty-five or seventy years of age who has 
resided within the state for several years and who is in indigent 
circumstances. In fact, the cost of maintaining the aged in alms¬ 
houses is as great as the pension allowed under the most liberal 
state laws; but a pension which will keep the aged and retired 
wage earner out of the depressing atmosphere of the almshouse 
is certainly a humane measure. 

A contributory insurance plan for old age protection may be 
theoretically superior to the non-contributory pension. It will 
not, however, aid those who have already reached or are near the 
age of retirement. In a country in which workers frequently 
move from one locality to another, the contributory pension plan 
demands “complicated administrative machinery for the collection 
of payments and preservation of records over long periods of 
time.” There are state and federal laws providing for contributory 
pensions for certain groups of state, municipal, and federal em¬ 
ployees. Federal employees on the classified civil service list pay 
3! per cent of their salary into an insurance fund which is supple¬ 
mented by public funds. Employees of the Panama Canal and 
the Panama Railway Company are protected by a “compulsory, 
contributory old age pension law.” State supervision of voluntary 
old age insurance has been tried without notable success in Massa¬ 
chusetts and in Wisconsin. 

UNEMPLOYMENT INSURANCE 

It has been pointed out that unemployment is the result of a 
complex of diverse causes. A consideration of this form of social 
insurance may well open by asking: What is the purpose of 


SOCIAL INSURANCE 


399 


unemployment insurance? What is it intended to accomplish? 
Is it a relief measure? Or is it designed to stimulate business 
managers to reduce seasonal, cyclical, or other irregularities in 
employment and plant operation? The term unemployment in¬ 
surance is ordinarily used to cover two similar but not identical 
programs: unemployment insurance, such as is found in Europe 
and New Zealand, and unemployment reserves, of which the plan 
provided by the Wisconsin law of 1932 is an example. Unemploy¬ 
ment insurance in this narrower sense is a relief measure. Un¬ 
employment reserves are secondarily for relief but primarily for 
the reduction of seasonal and cyclical irregularities in employment. 
Two other programs are closely related to that of providing un¬ 
employment reserves: a dismissal wage and employment guaran¬ 
tees. A dismissal wage is primarily introduced for the purpose of 
reducing and partially shifting the financial burden of technological 
changes and progress now resting on displaced workers and their 
families. The displaced worker would be paid a wage for a period 
after displacement. Workers who are promised a definite number 
of weeks’ work a year are given employment guarantees. The 
worker is assured of his job; and the employing concern stabilizes 
its production. 

It should be reiterated at the outset of the discussion of an 
unemployment insurance program that the workers of the nation 
are entitled to regular and suitable employment. A nation’s fun¬ 
damental responsibility is to keep its citizens and their families 
from destitution and starvation, to find suitable jobs for all who 
are willing and able to work. There is no adequate substitute, 
whether unemployment insurance or some other scheme, for a 
good job. The cry for a compulsory system of unemployment 
insurance or of unemployment reserves in the United States has 
arisen because American business men and our governmental 
representatives have failed efficiently to operate the big industrial 
machine, the United States of America, Inc., because we as a 
nation have failed to provide adequately and regularly for one 
hundred twenty-four million people. If we learn to operate this 
giant machine smoothly and continuously, there will be little 
unemployment and consequently little need for unemployment 
insurance. If, however, the best brain power of the nation is not 
directed toward the reduction of unemployment and the elimina- 


400 


LABOR PROBLEMS 


tion of the extreme peaks and hollows of the business cycle, we 
must expect insistent and persistent demands for unemployment 
insurance or for more radical programs. “ Employment insurance ” 
instead of unemployment insurance is the preferable program. 
Employment insurance would be a positive program. It would 
put the idler to work and give him purchasing power. In the 
words of Ethelbert Stewart, “There is plenty of work to be done 
in this country and plenty of people to do it.” 

In 1930 eighteen European countries, Mexico, and Queensland 
in Australia had “either voluntary or compulsory insurance schemes 
fostered and aided by the State.” 1 New Zealand also had an 
employment relief measure for male workers maintained out of 
funds provided by the workers and the government. Employers 
do not make payments toward the relief fund. Ten of the twenty 
countries have compulsory unemployment laws upon their statute 
books; the remaining ten provide for voluntary plans. In the 
majority of the compulsory laws, the employers, employees, and 
the state contribute. In Italy, the state pays nothing; in Russia, 
the employers alone contribute. In Germany, over eighteen mil¬ 
lions of workers are protected by the unemployment insurance 
program. Employers and workers contribute equal amounts 
toward the fund; the states and the central government provide 
funds in case of deficits and for an emergency fund. Benefits are 
paid in accordance with an elaborate classification based upon wage 
payments. Benefits are normally payable up to twenty-six weeks; 
but in a time of abnormal unemployment the period may be ex¬ 
tended. In this case, payments are made out of the emergency 
fund. In Great Britain, contributions are made by employers, 
employees, and the government. The English plan was first put 
into effect in 1911. It originally applied only to a. small fraction 
of British workers; in 1920, the scope of the measure was broadened 
so as to include under its provisions a large percentage of the 
wage workers of the nation. As the amount of unemployment 
has been abnormally large since 1920, it has been necessary for 
the government to lend large sums to the fund, and benefits 
have been extended beyond the period provided according to law. 
Under the British law, the amount of benefit paid is not fixed in 
proportion to the wages which the unemployed person had been 
1 Monthly Labor Review, Oct., 1930, p. 82. 


SOCIAL INSURANCE 


401 


receiving before losing his job. Flat rates are paid to all persons 
within a group based upon age and sex classification. Additional 
allowances are made for dependents. The English measure, like 
practically all the European unemployment insurance plans, was 
not intended to be an instrument used for the reduction of the 
amount of unemployment. It was expected to be a factor in re¬ 
lief for the unemployed and their families; it has been the means 
of placing a # certain amount of purchasing power in the hands of 
those out of work. This measure was planned to help sustain the 
total purchasing power of the nation, and to aid in reducing the 
dip of the business cycle. From this point of view, the British sys¬ 
tem of unemployment insurance should not be called unsuccessful. 

As has been indicated, the leading European statutes providing 
insurance in case of unemployment do so primarily for relief 
purposes. Unemployment appears to be accepted as inevitable 
and incurable. On the contrary, the American proposals look 
toward the reduction of seasonal irregularities in employment and 
also toward relief if seasonal irregularities are not eliminated. 
The notion prevails that employers and business managers can 
prevent or at least reduce the amount of unemployment. The 
American plans for unemployment reserves aim at the reduction 
of seasonal fluctuations in plant operation, and offer relief in cases 
of unemployment due to such irregularities; but, since these 
proposals limit payments to the unemployed worker to ten to 
thirteen weeks in a year, they do not provide for the catastrophe 
of a depression period of considerable duration. In the United 
States, it is proposed to penalize the employer who runs his plant 
irregularly. The advocates of unemployment reserves point to 
workingmen’s compensation. The laws providing for compensa¬ 
tion in the case of an industrial accident put additional financial 
burdens upon the employing concern which neglects to provide 
adequate safety appliances or to adopt methods which tend to 
reduce accidents. The American proposals for unemployment 
insurance aim to stimulate interest on the part of the employer 
in regularization. All the proposals to date (1932) seem to be 
aimed at the reduction of seasonal rather than cyclical irregu¬ 
larities in plant operation. In the case of technological unem¬ 
ployment, unemployment reserves would act like dismissal wages. 
The displaced worker who is unable to obtain suitable employment 


402 


LABOR PROBLEMS 


would receive for a short period of time the insurance payments 
provided under the law. 

In January, 1932, Wisconsin passed the first American law 
providing for unemployment reserves. The administration of the 
law is placed in the hands of the Industrial Commission. This 
body is authorized to develop an extensive system of public em¬ 
ployment agencies so that suitable employment may be found, 
if possible, for the unemployed. The law will become operative 
on July 1, 1933, unless employers with total payrolls of 175,000 
workers guarantee steady work or adopt an unemployment re¬ 
serve plan acceptable to the Industrial Commission. According 
to the provisions of the statute, each employer must pay into the 
state treasury two per cent annually of his payroll, excluding those 
who receive over $1,500 a year, until a fund is accumulated equal 
to $55 for each insured employee, after which he is required to 
pay one per cent until the fund reaches $75 for each employee. 
No further payment is required unless the fund is drawn upon to 
pay benefits. No payments are made by workers!' 

Each employing firm builds up a fund entirely separate from 
that required of other employers. One employer is in no way 
financially responsible for unemployment in another concern. Each 
eligible employee in case of unemployment may receive benefits 
equal to fifty per cent of his weekly wage, within a maximum 
payment of $10 and a minimum of $5 per week. The maximum 
period within which benefits may be received is ten weeks in a 
calendar year. A considerable group of employees, including farm 
labor, domestic servants, railway workers, public officials, and 
those who receive more than $1,500 per year, are excluded from 
the benefits of the law. Workers who have resided less than two 
years in Wisconsin or who have not worked for at least forty weeks 
within the state during the last two years are also excluded. The 
voluntary quitting of a job renders a worker ineligible to receive 
unemployment benefits; a worker discharged because of misconduct 
is also ineligible to benefits. A claimant for benefits must register 
with the public employment agency in his district, and must accept 
suitable employment when offered. Debatable questions as to 
what is suitable employment and what constitutes misconduct 
will be decided by the Industrial Commission. 

If a reasonably well-drawn plan of unemployment reserves, 


SOCIAL INSURANCE 


403 


similar to the Wisconsin law, is on the statute books of a state, 
industry within the state is held responsible for ordinary seasonal 
irregularities and for a payment of a fraction of the wage for a 
period of ten to thirteen weeks in the case of technological and 
management changes which cause displacement of workers. Under 
this law, however, the industry is not responsible for long periods 
of unemployment due to a serious depression or for technological 
unemployment after a short period of unemployment has passed. 
Unemployment reserves are primarily advocated in order to reduce 
the irregularity of industrial operation, and to take from the 
shoulders of displaced workers part of the burden of irregularity of 
employment and of technological advance. Under the operation 
of such a measure the cost of change, which has been in a large 
degree placed upon the consumer and the worker, will be placed 
more directly upon those responsible for the change. 

If industry is made responsible for unemployment reserves which 
provide payment to the displaced or laid-off worker for ten to 
thirteen weeks, governmental units may reasonably be held re¬ 
sponsible for the care of the unemployed and their families after 
that period is ended, and provided no suitable job can be found 
for the breadwinner of the family. If the community and busi¬ 
ness fail in operating the industry of the United States of America 
in a systematic fashion, then direct aid or relief should be given 
to the unemployed. If industry is paralyzed as in 1929-1932, 
public and private relief must be called upon. Unemployment in¬ 
surance cannot reasonably be expected to fill the gap. If all the 
methods of reducing unemployment fail, then and then only should 
the community be called upon for .charity or doles. 

Any public unemployment or reserves plan confronts at least two 
obstacles, (a) How can the willingness to work be tested? In 
England and Germany, excellent networks of public employment 
bureaus have been organized. To these the unemployed must ap¬ 
ply before they become eligible to receive benefits. If the bureau 
cannot find a suitable job for a registered workless person, he is 
in line to receive insurance benefits. ( b ) What is suitable employ¬ 
ment? Shall a skilled worker out of a job be obliged to take one 
requiring little skill if no other be available, or forfeit his rights 
to benefits? In clear cases, the answer is no; but in actual practice 
many border cases will appear to perplex the authorities. Any un- 


404 


LABOR PROBLEMS 


employment insurance plan which can be well administered must 
be supplemented by a good system of public employment agencies. 

Private unemployment benefit plans in the United States may 
be divided into three groups, (i) Union Plans. In 1931 three 
small national unions composed of skilled workers, and a consid¬ 
erable number of locals, maintained unemployment benefits for 
their members. About 45,000 were eligible to benefits. (2) Em¬ 
ploying Company Plans. Fifteen plans established by individual 
employers or groups of employers were in existence in May, 1931. 
Of about 116,000 employees only slightly more than 50,000 were 
eligible to the benefits provided for the unemployed. Six of these 
companies guaranteed employment for a definite number of weeks 
per year. The Procter and Gamble Company, for example, 
guarantees employment at full pay for 48 weeks per year. The 
Dennison Manufacturing Company, the Dutchess Bleachery, 
Leeds and Northrup, and three companies jointly in Fond du Lac, 
Wisconsin, have developed unemployment benefit funds toward 
the maintenance of which the workers do not contribute. The 
General Electric Company and a few other firms have organized 
joint contributory schemes. (3) Joint Agreement Plans. These are 
established by an agreement between labor organizations and 
employers. Approximately 65,000 workers were covered in May, 
1931. The most important and well-known plans in this group 
are found in the men’s clothing industry, based on agreements made 
with the Amalgamated Clothing Workers. In Chicago, employers 
contribute 3 per cent and employees ij per cent of the payroll. 
The fund is controlled and administered by a Board of Trustees. 
Subject to certain qualifications, employment benefits will be paid 
at the rate of 30 per cent of full-time weekly wages. In New York 
City, the cost is borne by the employers, and, in Rochester, equally 
by employers and employees. In the ladies’ garment industry 
in Cleveland by joint agreement, the employers guarantee 38 (was 
40) weeks’ work each year. If work is provided only for less than 
the 38 weeks, one-half of the regular wage is to be paid for the 
idle time beyond the 14 weeks not covered by the agreement. 
To date, private plans have provided for only a small percentage 
of the total number of wage workers. 1 

1 Bulletin of the Bureau of Labor Statistics, No. 544; Monthly Labor Review, 
Dec., 1931, pp. 31 ff. 


SOCIAL INSURANCE 


405 


Several foreign nations have enacted laws applying to the dis¬ 
charge of industrial workers and providing for dismissal wages. 
In the United States the practice of paying a dismissal wage has 
been growing. It has been estimated that during the five years 
preceding 1932 over “half a hundred formal and an equal number 
of informal dismissal compensation plans have been adopted.” 
Among the companies which have used the dismissal wage plan 
are the United States Rubber Company, Hart Schaffner & Marx, 
the Norton Company, the American Rolling Mill Company, the 
Dennison Manufacturing Company, General Foods Corporation, 
and the Delaware and Hudson Railway. The General Foods 
Corporation, for example, gives thirty days’ advance notice and 
aids in finding other jobs. A dismissal wage is paid according to 
the following schedules: “Employees with a service record of 
from eighteen months to four years and six months each receive 
two per cent of their last yearly salary multiplied by full years 
of service; those with service records of from four years and six 
months to nine years and six months each receive two and one-half 
per cent of their last yearly salary multiplied by full years of 
service; and all employees with a service record of more than 
nine years and six months receive three per cent of their last yearly 
wage multiplied by full years of service.” 1 The dismissal wage 
program is a recognition of the notion that industry should right¬ 
fully bear at least part of the cost of obsolescence of labor as well 
as of machinery and other forms of capital. 

REFERENCES 

Blum, S., Labor Economics, Chap. 7 

Callcott, Mary S., Principles of Social Legislation, Chap. 9 
Carroll, Mollie R., Unemployment Insurance in Germany 
Commons, J. R., and Andrews, J. B., Principles of Labor Legislation 
Davison, R. C., What's Wrong with Unemployment Insurance? 

Downey, E. H., Workmen’s Compensation 
Epstein, A., The Challenge of the Aged 

-, Facing Old Age 

Furniss, E. S., Labor Problems, Chap. 7 
Gibbon, I. G., Unemployment Insurance 

1 Schwenning, G. T., Forbes, Aug. 1, 1932, pp. 13-14; American Economic 
Review, Vol. 22, pp. 241 ff. 


406 


LABOR PROBLEMS 


Gilson, Mary B., Unemployment Insurance in Great Britain 
Patterson, S. H., Social Aspects of Industry , Chap, io 
Rubinow, I. M., The Care of the Aged 
Seager, H. R., Social Insurance 

Watkins, G. S., Labor Problems , Chap. 15 and pp. 166 ff. 

Yoder, D., “ Some Economic Implications of Unemployment Insurance,” 
Quarterly Journal of Economics, Aug., 1931 
American Labor Legislation Review 
Bulletin of the Bureau of Labor Statistics, No. 544 
Monthly Labor Review, Dec., 1931; Oct., 1930, pp. 82 If.; March, 1932 
(Wisconsin law) 


CHAPTER XXIII 


COOPERATION 

TYPES OE COOPERATIVE ENTERPRISES 

Cooperative enterprises may be divided into at least four gen¬ 
eral classes: (i) consumers’ cooperation, represented by the co¬ 
operative store; (2) producers’ cooperation, of which a factory 
operated by the workmen in the plant is an example; (3) distribu¬ 
tors’ cooperation as in the case of the marketing of fruit by a 
cooperative association; and (4) credit cooperation, illustrated by 
a credit union. The third and fourth forms are usually organized 
and controlled by others than wage earners; and, consequently, 
will only be given brief consideration. Indeed, producers’ co¬ 
operation is the only one of the four forms which is strictly a wage 
workers’ association. 

Unlike profit sharing, cooperation of the first or second class 
involves a fundamental change in the present industrial order. 
Profit sharing is a device proposed and inaugurated by the em¬ 
ployer primarily to increase his profits, and to enable him to cope 
more easily with his competitors or to reduce industrial or political 
friction and opposition. The control of the business remains in 
the hands of the management, the representatives of the owners. 
On the other hand, cooperation places the business in the hands 
of the employees or the consumers, and sweeps the employer aside 
as a useless encumbrance. The management of the business is 
placed in the hands of a manager or superintendent selected by the 
workers or by the customers. Consumers’ cooperation has been 
designated as the “third tool” of the workers; by its use they 
are organized as consumers. The other two “tools” are labor 
parties and labor organizations. Producers’ cooperation is clearly 
a form of industrial democracy. The employer and the employee 
are merged into one. The workers participate in the profits of the 
business, and its control is in their hands. While cooperation 
means a radical change in industrial control, it has confronted 

407 


408 


LABOR PROBLEMS 


little opposition because it comes about in a piecemeal fashion, 
does not require political action, and does not demand direct- 
action methods. 


THE COOPERATIVE STORE 

A store operated by a corporation or by a partnership and a 
genuine cooperative store exhibit marked differences. In the 
cooperative store, the profit or surplus after paying running ex¬ 
penses, including depreciation, and interest on the capital stock, 
is divided among the cooperating purchasers in proportion to the 
value of the goods purchased. The family of a cooperator pur¬ 
chasing twice as much at the store as another, receives double the 
rebate or dividend received by the latter. In a store operated by 
a corporation, the profits are distributed among the stockholders 
in proportion to the amount of stock owned. To become a co- 
operator, one must buy at least one share of stock — usually of 
low par value — upon which a definite rate of interest is paid. 
In a cooperative store, each cooperator has one vote only; in the 
case of a corporation, the stockholder has as many votes as shares 
of stock. Voting by proxy is not ordinarily permitted in a co¬ 
operative organization. As a rule, credit is not allowed on purchases 
made at a cooperative store. The sale price is usually the market 
price of the goods purchased. Non-members may purchase goods; 
but will not receive a dividend or rebate upon such purchases. 
A genuine cooperative store distributes dividends according to 
purchases, pays interest upon the money invested by the coopera¬ 
tors, and allows one vote per cooperator. Not all organizations, 
however, called “cooperative” are genuine. 

CONSUMERS’ COOPERATION IN GREAT BRITAIN 

The first practically successful cooperative stores were organized 
in Rochdale, England, in 1844. Other movements, however, pre¬ 
ceded the attempts of the “Rochdale Society.” Robert Owen 
was much interested in the movement. According to the late 
Professor Frank Parsons, in 1830 there were 250 cooperative 
societies in England. But the weavers of Rochdale seem to have 
been the true pioneers in this important movement. In recent 
decades the growth of consumers’ cooperation in Great Britain 


COOPERATION 


409 


has been notable. In 1927 the cooperative retail stores of Great 
Britain had a membership of nearly 5,000,000. Approximately 
one-third of the families of the country were represented. Two 
important wholesale cooperatives were controlled by the retail 
establishments. These in turn operated manufacturing enter¬ 
prises, fishing fleets, steamships, and plantations. The wholesale 
societies of Great Britain are reported to be “the largest importers 
of tea, grain, butter, sugar, and dried fruits.” 1 The cooperative 
establishments of Great Britain constitute one of the great busi¬ 
nesses of the world. It is a business that “has never been accused 
of raising prices, has not created even a moderate fortune for 
anybody, has not a single officer who is a ‘ magnate,’ a ‘ captain of 
industry/ or even a ‘high financier.’ It has no securities on the 
market, and has never had an underwriting syndicate.” Some 
British cooperatives have extensive libraries; classes in art, science, 
and literature, and lectures upon a variety of subjects are conducted 
under the auspices of the societies; concerts, entertainments, and 
excursions are arranged for the members; and some societies con¬ 
duct evening continuation schools. The movement has also 
achieved considerable success in Belgium, France, and other Eu¬ 
ropean countries. 

consumers’ cooperation in the united states 

In the United States, some ephemeral attempts were made 
soon after 1831, by the New England Association of Farmers and 
Mechanics, to organize cooperative stores. The life of these ven¬ 
tures into untried fields was short. During the unique period of 
the forties and fifties, characterized by an extraordinary amount 
of political and social ferment, cooperative stores were organized 
by associations of farmers and mechanics. Many stores, possibly 
as many as 700, were doing business at one time in the early 
fifties; but with the opening of the Civil War came an abrupt ter¬ 
mination of the movement. In the latter years of that struggle 
there was much agitation and discontent among the workers, and 
some ephemeral cooperative stores were established. Soon after 
the war ended, cooperative associations were formed in connection 
with certain farmers’ organizations and some labor unions. 

1 Warbasse, J. P., Cooperative Democracy , p. 35. 


4io 


LABOR PROBLEMS 


The Patrons of Husbandry, popularly known as the Grangers, 
established many cooperative stores early in the seventies. In 
1876 the highest officer of the order said: “Hundreds, and, it 
may be, thousands, of cooperative stores have been established 
in the various States and Territories of the Union with various 
amounts of capital, and perhaps as various in other features and 
their fortunes.” At one time there were grange stores in nearly 
every county in Ohio and in one-half of the counties of Illinois. 
“The enthusiasm of the Grangers for cooperation gradually died 
away as prosperity followed the panic of 1873, and with the re¬ 
laxation which usually follows the rapid growth of any organiza¬ 
tion.” Cooperation was a basic principle of the Knights of Labor; 
and a considerable number of cooperative stores were established 
during the period, 1881-1888, under the auspices of that labor 
organization. 

In 1929 the Bureau of Labor Statistics found 656 consumers’ 
cooperative establishments in the United States — retail store 
societies, 422; distributive departments of marketing associations, 
52; societies operating gasoline filling stations, 146; others operat¬ 
ing boarding houses, bakeries, restaurants, etc., 36. Several col¬ 
lege cooperative stores have been successfully operated. These 
societies operated 845 establishments of various kinds, employed 
over 4,000 full-time workers, and reported a combined membership 
of over 200,000. Eight cooperative wholesale organizations were 
in existence in 1929. Consumers’ cooperation in the United States 
has not as yet been notably successful. A membership of 200,000 
compared with 5,000,000 in Great Britain is indicative of the lack 
of interest in the movement in this country. 

Why has consumers’ cooperation obtained only a precarious 
foothold in the United States? Several reasons have been advanced 
by students of the movement. In this country, department stores, 
five- and ten-cent stores, mail order houses, trading stamp schemes, 
and expert advertising have been obstacles in the path of the 
cooperative store movement. The American people have been 
too individualistic; cooperation has not appealed to them. The 
mobility of the American workman is much greater than that 
of the European worker, who usually remains in the town in 
which he was born. Americans have been less thrifty than Euro¬ 
peans; the prospect of obtaining small savings must attract those 


COOPERATION 


411 

who make good members of cooperative associations. Our higher 
standards of living have led to the demand for a variety of food, 
clothing, and other commodities. Only stores with a considerable 
amount of fixed capital can successfully compete when it is neces¬ 
sary to carry a large and varied stock. The lack of powerful 
wholesale cooperatives has also interfered with the growth of 
retail cooperatives. The ignorance of the farmer and the wage 
earner as to the desirability of expert managerial skill has caused 
many cooperative ventures to end in failure. A man taken from 
the farm or out of the shop without much business experience 
will rarely make a successful manager of a cooperative store. 
“Poor business methods, injudicious purchases, over-stocking, 
wastes in weighing, and many other practices, all of which bring 
disastrous results, are very prominent in the cooperative move¬ 
ment.” 


producers’ cooperation 

In the pure and simple form of producers’ cooperation a number 
of workers unite to operate a productive enterprise. They furnish 
or borrow the capital, and elect the manager of the business. The 
ultimate control of the enterprise rests with the workers, not with 
the owners of capital. Each worker is allowed one vote, and all 
workers in the establishment are admitted to membership. Such 
is producers’ cooperation in its normal condition. The plan is 
theoretically excellent; it appeals to the idealist. In actual prac¬ 
tice, however, producers’ cooperation has encountered many ob¬ 
stacles. 

The gilds of the medieval period were in reality forms of pro¬ 
ducers’ cooperation. The employer or capitalist function was not 
as yet differentiated from that of the worker. With the downfall 
of the gild system, producers’ cooperation vanished. The first 
isolated example of a cooperative society of producers is found in 
England in 1777. A few tailors on a strike formed a cooperative 
association. But France is the real cradle of producers’ coopera¬ 
tion. A society of jewelers was formed in 1833, a decade before 
the attempt of the Rochdale Pioneers. The revolutionary dis¬ 
turbances of 1848 ushered in many attempts at cooperative activ¬ 
ity. The government loaned money to certain associations, and 
favored associated groups of workmen in granting public contracts. 


412 


LABOR PROBLEMS 


The movement was based on the quicksands of enthusiasm and 
sentimentality. Failure was the end of practically all of these 
ephemeral and subsidized ventures. 

In the United States attempts have also been made to establish 
producers’ cooperative associations. There is reason for believing 
that in 1730 a cooperative movement was started among the 
fishermen of New England. The first well-authenticated move¬ 
ments were those of the Philadelphia cabinet makers in 1833, 
the molders of Cincinnati in 1848, and the Boston tailors in 1849. 
During the decade of the eighties, the Knights of Labor were re¬ 
sponsible for the organization of many cooperative associations. 
The most famous of the American attempts was that of the 
coopers of Minneapolis. After two failures, a successful venture 
was made in 1874. In 1886, there were seven cooperative asso¬ 
ciations; in 1905, only three survived; in 1931, the last association 
ended its career. The cooperage business as an adjunct to the 
milling industry of Minneapolis was a declining industry. The 
Bureau of Labor Statistics found 39 producers’ cooperative asso¬ 
ciations in 1925, and 20 in 1929. Those existing in 1929 were 
distributed among the following industries: box, cigar, shoe, and 
veneer factories, coal mining, enameling plants, fish canneries, 
laundries, and shingle mills. 1 

The longshoremen have utilized producers’ cooperation in a 
simple but interesting manner. Local groups divide their mem¬ 
bers into gangs. Each gang elects its own foreman; and the union 
distributes the work among the gangs. The foreman collects the 
wages for the entire gang, and divides the amount equally among 
the members, himself included. The union under these condi¬ 
tions is practically a contractor. Loafing is corrected by the public 
sentiment of the gang, as it is to the interest of the gang that all 
work and work efficiently. 

It is difficult for manual laborers to give sufficient weight to 
managerial ability. Cooperating workmen are usually loath to 
pay sufficient wages to secure an efficient manager; nor are they 
willing to give him adequate authority in the management of the 
plant. Industrial democracy, as found in producers’ cooperation, 
has thus far exhibited the faults of early political democracy — 

1 Monthly Labor Review, Dec., 1930, p. 28; Virtue, G. O., Quarterly Journal 
of Economics , Vol. 46, pp. 541-545. 


COOPERATION 


413 


lack of emphasis upon experience and expertness, frequent changes 
in officials, and the like. In a self-governing workshop some 
person or group of persons must be given authority to issue orders 
based upon expert judgment, and which must be obeyed. A factory 
cannot be successfully operated if technical decisions are subject 
to a referendum to the rank and file of the workers. “The willing¬ 
ness to take orders will be the chief test of the new consciousness 
of industrial democracy. . . . Here is the supreme problem of 
morals and intelligence. It is the crux of democracy in whatever 
field of conduct.” 1 

A producers’ cooperative association cannot obtain large amounts 
of capital, and it is not easy to attract and hold customers in the 
face of fierce competition from non-cooperative business rivals. 
Unless the work is practically of a uniform character, the problem 
of a fair division of the profits between different types of workers 
is not easy to solve. When losses instead of profits appear the 
danger of disruption is not small. Indeed, the menace is a double 
one. When the venture is successful, and additional workers are 
needed, the original members are prone to hire workers instead of 
admitting them as full-fledged cooperating and profit-sharing mem¬ 
bers. Thus, the successful plant soon becomes in essence a cor¬ 
poration. The producers’ cooperative association is in a position 
of unstable equilibrium. If successful or unsuccessful financially, 
its life as a cooperative association is soon ended. 

A producers’ cooperative establishment is in the most favorable 
condition for successful operation (a) when the managerial ability 
required is slight, ( b ) when the business is not complex, (c) when 
the work requires little difference in the skill of the workers, and 
(d) when only a small amount of capital is needed for the efficient 
operation of the business. An investigation of producers’ asso¬ 
ciations in the cooperage industry of Minneapolis reached the 
conclusion that this form of organization has given greater per¬ 
manence and regularity of employment to the membership of 
the association; it has improved and strengthened the character of 
the workers; and it has proved that democratic control does not 
necessarily involve dishonesty, insubordination, or frequent changes, 
in the personnel of management. 2 

1 Hobson, J. A., Incentives in the New Industrial Order, p. 125. 

2 Virtue, G. O., Quarterly Journal of Economics, Vol. 19, pp. 527-544. 


414 


LABOR PROBLEMS 


DISTRIBUTORS’ COOPERATION 

In this class are found such enterprises as cooperative cream¬ 
eries, cooperative elevators for the grain of the Western farmer, 
and cooperative associations for the purpose of growing and market¬ 
ing raisins. The cooperative elevators are established by combina¬ 
tions of farmers in order to cope successfully with the so-called 
“ grain-buyers’ trust.” The California Raisin Growing Association, 
formed in 1898, was evidently organized to control prices. Every 
member of the association is required to sign a contract putting 
the management of his raisin crop in the hands of the association. 
The raisins are to be packed and marketed in such a manner as 
seems best to the officers of the association. Each member de¬ 
livers his raisins to an association packing house. An inspector 
of the association weighs them and credits the amount to the 
grower. A large fraction of the citrus fruit grown in California is 
sold by cooperative associations. In the grain-growing states, 
farmers have organized large numbers of cooperative elevators. 
The Division of Cooperative Marketing of the United States 
Department of Agriculture estimated in 1928 that approximately 
2,700,000 farmers sold all or a part of their products through co¬ 
operative societies. Grain, fruit, dairy products, livestock, cotton, 
vegetables, tobacco, and other products are sold by cooperative so¬ 
cieties. The aggregate business was estimated to be $2,400,000,000 
annually. Such associations are of little importance to the wage 
workers; they are examples of middle-class cooperation. 

CREDIT COOPERATION 

Credit cooperation attained its greatest success among the 
farmers of Germany. The movement started about the middle 
of last century. By means of these associations farmers, small 
business men, and wage earners are enabled to borrow at rea¬ 
sonable rates of interest. One authority on agricultural condi¬ 
tions in Germany declared that “the German peasantry were 
saved from ruin when by means of cooperation personal credit 
was established.” The wage earners, however, do not appear to 
have profited in any considerable degree by the establishment of 
credit associations. But the farmers have been saved from the 
clutches of the astute and avaricious money lender. 


COOPERATION 


415 


At the end of 1929, there were 974 credit unions operating in the 
United States. Of this number, 299 were located in Massachusetts, 
and 125 in New York. Thirty-two states had passed credit-union 
legislation. The shares in credit associations are of small de¬ 
nomination — $5.00 to $25.00 as a rule. Usually a limit is placed 
upon the number a member may purchase. A member is allowed 
to pay for his shares in small weekly installments. Only members 
of a credit union may borrow from it; but a member can borrow 
at a reasonable rate of interest. The membership in a credit 
union is as a rule “limited to a group having a common bond of 
occupation or association, or to persons residing within a well- 
defined neighborhood, community, or rural district.” The credit 
union may be called “the poor man’s bank.” 1 

THE BUILDING AND LOAN ASSOCIATION 

This specialized form of credit association is found chiefly in 
Great Britain and the United States. These associations were 
organized for the purpose of aiding wage earners and small salaried 
workers in acquiring homes. Later, persons who did not wish to 
borrow became depositors. A depositor merely wishes a safe 
investment. The building and loan association makes an appeal 
to the pride of home building and home owning. The typical 
association is local in scope. A group of people living in a city 
or town agree to merge their savings in a fund for building homes. 
A corporation is organized in which a member of the group 
becomes a stockholder to the extent of one or more shares. 
Payments upon shares are made in small monthly installments. 
Interest is allowed upon the sums paid in; and the interest thus 
credited reduces the total amount of the payment. The money 
collected monthly is loaned to members to be used to build or 
purchase homes under the supervision of the officers of the Associa¬ 
tion. No sum larger than the face value of the shares for which 
the member has subscribed is loaned. The property is held as 
security by the Association. The loan is usually made to the one 
who offers the highest premium in addition to the customary 
rate of interest. A borrowing member pays the interest on his 
loan and the monthly installment on the share which he holds; 

1 Monthly Labor Review , Nov., 1930, pp. 1-11. 


416 


LABOR PROBLEMS 


but eventually the paid-up stock is used to cancel the debt. The 
following table presents statistics of the building and loan associa¬ 
tions of the United States: — 


Year 

Number of Associations 

Assets 

Membership 

i 89 S 

5,973 

$624,700,318 


1900 

5,490 

614,119,175 


1905 

5,326 

646,765,047 

1,686,611 

1918 

7,269 

1,769,142,175 

3,838,612 

1930 

n ,777 

8,828,611,925 

12,350,928 


Through the instrumentality of these associations many skilled 
workers and salaried men have become real estate owners, thus 
increasing the number of conservative wage earners. The great 
majority of workers whose wages are small are not affected by 
this method of cooperation, as their wages are insufficient to allow 
them to become members. The insecurity of the job of the average 
unskilled or semi-skilled worker makes him hesitate about joining 
a Building and Loan Association. Finally, many unionists fear 
that certain hard-boiled employers will take advantage of the 
home-owning employees, and will lower, or refuse to increase, their 
wages. In that event, the home-owning employee must accept 
the situation or move and perhaps dispose of his home at a financial 
sacrifice. The Building and Loan Association offers no important 
aid to the average member of a labor organization. 

CONCLUSION 

The cooperative store eliminates certain wastes in the competi¬ 
tive field; but the large department store accomplishes the same 
result. In one case, the consumers receive a larger percentage of 
the reduction in the cost of doing business than in the other. If, 
however, the reduction in the cost of living due to the economies 
resulting from membership in a consumers’ cooperative association 
makes possible a reduction in wages or prevents an increase in 
wages, consumers’ cooperation may be of little or no real value 
to the wage worker. And if wages in industries affected with 
public interest are to be fixed in the future by means of a careful 
estimate of the cost of living, made by wage boards or courts of 
arbitration, the helpfulness of cooperative buying to the wage 
worker in those industries is problematical. It may be asserted 




COOPERATION 


417 


that, if the wage worker is to retain the advantages of cooperative 
buying, consumers’ cooperation must be accompanied by strong 
union organization. 

Unless consumers’ and producers’ cooperative enterprises are 
united there is an element of antagonism between these two forms 
of cooperative endeavor. The former seeks to reduce prices, while 
the latter is interested in raising the price of its own products. 
Producers’ cooperative associations come into competition with 
each other in the same way that competition arises between rival 
non-cooperative firms. Only as these enterprises become nation¬ 
wide is the element of rivalry and competition eliminated. In 
that case a condition approximating Socialism is attained, and 
voluntary cooperation would pass into compulsory cooperation. 
The benefits to be derived by the wage worker through cooperative 
activity “are limited by the possibilities of the two varieties of 
cooperation, the one which gives the profits to the purchaser, but 
cannot raise wages, and the other which gives the profits to the 
producer, but cannot prevent the action of cut-throat competi¬ 
tion.” 1 Cooperation is not a substitute for trade unionism. If 
used in conjunction with union action it may be of use to the 
wage-earning group; but there may be danger of weakening the 
solidarity of organized labor by looking constantly at the small 
gains which may be derived through cooperation. 

REFERENCES 

Atkins, W. E., and Lasswell, H. D., Labor Attitudes and Problems, 
Chap. 20 

Catlin, W. B., The Labor Problem, Chap. 22 

Janes, G. M., “Cooperative Production among Shingle-Weavers,” 
Quarterly Journal of Economics, Vol. 38, pp. 530-536 
Lockwood, G., The New Harmony Movement, Chap. 21 
Virtue, G. 0 ., “The Cooperative Coopers of Minneapolis,” Quarterly 
Journal of Economics, Vol. 19, pp. 527-544; Vol. 46, pp. 541-545 
Warbasse, J. P., Cooperative Democracy 

Monthly Labor Review, May, 1930, pp. 108-110; Sept., 1930, pp. n-18; 
Oct., 1930, pp. 21-34; Nov., 1930, pp. i-n; Dec., 1930, pp. 25-32 

1 Adams, T. S., and Sumner, H., Labor Problems, p. 431* 


CHAPTER XXIV 


IMMIGRATION AND POPULATION PROBLEMS 

WHAT IS IMMIGRATION? 

Migration is as old as the human race. In primitive times 
groups of men wandered from place to place. Later came invasion, 
conquest, and colonization. But not until comparatively recent 
times do we find a movement of men, women, and children in a 
thin and fluctuating stream from one organized community or 
nation to another. Such a movement is immigration. The first 
European settlers on American soil were colonists; recent comers 
are clearly immigrants. When did colonization end and immigra¬ 
tion begin? When did the first immigrant land on these shores? 
When did America begin? No one can answer these simple ques¬ 
tions with any considerable degree of precision. Clearly, however, 
after the United States was formally organized, newcomers were 
immigrants. 

The immigration or the restriction of immigration from foreign 
nations may be of direct import to the wage workers and to the 
employers of the United States because immigration affects the 
supply of workers, because the incoming workers may possess a 
lower standard of living than the native workman, thus endanger¬ 
ing the existing scale of wages, and because such immigration may 
increase subdivision of labor and thus modify working conditions. 
Less directly, immigration will affect the wage earners by modifying 
the character of labor organizations, by introducing new factors 
into state, local, and national politics, and by increasing racial 
differences. 

HISTORY OF IMMIGRATION TO THE UNITED STATES 

Definite records of immigration to the United States begin with 
the year 1820. Before that date no accurate statistics are available. 
Nevertheless, it may be assumed that immigration was inconsid¬ 
erable and that the natural rate of increase of the population was 

418 


IMMIGRATION AND POPULATION PROBLEMS 419 

not small. In 1751 Benjamin Franklin estimated that the one 
million inhabitants of the Colonies were the descendants of immi¬ 
grants not exceeding eighty thousand in number. From 1776, 
the year in which the Declaration of Independence was signed, 
to 1820 there were few incentives for immigration into this newly 
organized nation. A commonly accepted estimate of the total 
immigration from 1776 to 1820 fixed the number at 250,000. 

After 1820 westward expansion became rapid, and American 
industrial advance began. A graphic chart showing the number 
of immigrants coming to this country during the century from 
1820 to 1920 presents a wave-like appearance. As a rule each 
succeeding wave is higher than the one which preceded it. The 
first wave reached its highest point in the fiscal years 1836 and 
1837. The second wave culminated in 1851 to 1854; the third 
in 1866 to 1873; the fourth in 1882; and the fifth in 1892. The 
sixth and mightiest wave reached a maximum in 1907; the seventh 
and last big wave appeared in 1914. The number of immigrants 
in 1837 was 79,380; in 1854, 427,§335 in i 8 73> 459> 8o 3; in * 88 2, 
788,992; in 1892, 579,663; in 1907, 1,285,349; and in 1914, 
1,218,42c. 1 Following the crest of each wave is a period in which 
the number of immigrants is reduced. The low-water marks are 
found in 1838, 1862, 1878, 1886, 1898, 1909, and 1918. The fig¬ 
ures for these years are 38,914, 72,183, 138,469, 334,203, 229,299, 
751,786, and 110,618 respectively. The outbreak of the War 
caused a marked contraction in the stream of immigration. For 
the decade ending in 1910, the average yearly gross immigration 
was approximately 879,000; for the decade ending in 1920, 570,000; 
and in 1930, 400,000. 

From 1820 to 1910, nearly thirty millions of Europeans migrated 
to this country. This stream of human beings is larger than was the 
total population of the United States in 1850; it is almost equal 
to the number of people dwelling within our borders when Lincoln 
was elected President. During 1910, the number of immigrants 
coming to our shores, many of whom were seeking homes and were 
to become citizens and the parents of future citizens, was greater 
than the population of New Hampshire, Vermont, and Delaware; 
it exceeded in amount the population of five young Western com¬ 
monwealths—Idaho, Wyoming, New Mexico, Arizona, and Nevada. 

1 The figures for the years preceding 1867 are for “Alien Passengers.” 


420 


LABOR PROBLEMS 


In 1910 only twenty-seven states exceeded in population the num¬ 
ber of immigrants who came in one year, 1907. That incoming 
horde was equal to one-third of the total population reported by 
the first census (1790). In the words of Professor Ripley, “we 
have to do, not with the slow processes of growth by deposit or 
accretion, but with violent and volcanic dislocation. We are called 
upon to survey a lava-flow of population, suddenly cast forth from 
Europe and spread indiscriminately over a new continent.” 

The total immigration during a given time is always more than 
the net gain, because many immigrants return each year to their 
home country. Accurate statistics of emigrant aliens were not 
gathered until the fiscal year of 1908. During that year the alien 
immigration amounted to 782,870, and the alien emigration to 
395,073; or the net gain through immigration was 387,797. In 
1911, the net immigration was 512,085. During a period of de¬ 
pression the outward flow becomes considerable. From Novem¬ 
ber 22, 1907, to January 1, 1908, 103,848 persons were reported 
to have sailed third class from the ports of the United States and 
Canada for Europe. In the calendar year of 1931, the number of 
immigrants was drastically reduced as a result of the strict enforce¬ 
ment of the “likely to become public charge” provision of our 
laws. The aliens departing exceeded the immigrants arriving. The 
number of immigrants arriving in 1931 was 43,353; and the num¬ 
ber of emigrants departing was 89,570. About 207 left the country 
for every 100 admitted in the year 1931. 

The World War brought new phases of the immigration problem 
into prominence. The selective draft disclosed to the American 
people that many recent immigrants had “experienced only the 
faintest initiation into the real life of the nation.” As a conse¬ 
quence of this new vision and of the ultra-radical agitation in 1919 
and the years immediately following, a vigorous demand for 
Americanization arose. It was felt that the famous “melting pot” 
was not succeeding in the assimilation of large numbers of recent 
immigrants. 


CAUSES 

The stream of immigration does not flow smoothly and uni¬ 
formly. Immigration and emigration are caused by repulsive and 
attractive forces, by pushes and pulls. Prosperity and depression, 


IMMIGRATION AND POPULATION PROBLEMS 421 


religious and political freedom and persecution, and disturbing or 
reassuring social conditions are factors in determining the stream 
of immigration. The most important factor is economic. Pros¬ 
perity in this country and bad times in the homeland start men 
and women from their homes in search of better opportunities to 
gain a livelihood. Other forces have modified the course of immi¬ 
gration to the United States; but the close connection, before 
restrictive laws were put on the statute books, between prosperity 
in this country and the influx of immigration is evident even to the 
casual observer. The years tracing the high-water mark of immi¬ 
gration are almost invariably preceded by epochs of prosperity and 
of business expansion, and are as invariably followed by years of 
depression and of business retrenchment. The wave culminating 
in 1854 seems to have been an exception to this statement. . In 
that case the ending of acute political and economic disturbance 
in Europe and the Know-Nothing agitation in the United States 
operated to cause a marked diminution in the amount of immigra¬ 
tion in the midst of a period of prosperity on this side of the Atlan¬ 
tic. The small immigration in the fiscal year of 1862 is due to 
abnormal conditions accompanying the Civil War. Political and 
religious persecutions have played an important part in stimulating 
the migration of people to America which has been so often and 
so vividly painted as a haven of refuge for the weak and oppressed 
of all nations. Persecution was a potent factor in the colonization 
of the Atlantic coastal plain. Puritans, Roman Catholics, Quakers, 
and Scotch-Irish migrated to escape persecution and to reach a 
locality where they might be free from the fetters of European 
tyranny. After the revolutionary disturbances in Germany large 
numbers of political liberals came to this country. Many Russians, 
Jews, and Poles have migrated to our shores because of religious 
and political persecution. The desire to escape compulsory military 
service has also been a factor in inducing migration to this country. 

Another cause is found in the low wages and bad economic condi¬ 
tions in certain European countries. The great migration of Irish 
from 1847 to 1854 was induced by the suffering in connection with 
the potato famine and the landlord system. During this period 
of eight years nearly 1,200,000 Irish crossed the Atlantic to seek 
homes in America. Others were attracted by the possibility of 
obtaining farm land. In recent years the man from Southern 


422 


LABOR PROBLEMS 


Europe has been induced to leave his native land because of the 
high money wage paid in the United States. The fundamental 
causes of immigration to the United States since 1820 are found 
in the apparent contrast between political and religious persecution 
or oppression in the Old World, and religious and political tolerance 
and freedom in the United States; and also in the apparent con¬ 
trast between the economic and labor conditions in the old and 
exploited countries of Europe and the young nation of the New 
World, abounding in land and undeveloped resources. 

In addition to the underlying causes of immigration several 
secondary forces materially increased the total volume in the 
decades immediately preceding the opening of the World War. 
The ease of transportation and communication tended to increase 
the flow of immigration. To cross the ocean was no longer a 
dangerous and trying experience. The trip could be made quickly, 
cheaply, and surely. Immigration was not restricted as had been 
the case in pioneer days to the self-reliant, the ambitious, and the 
forceful. “The sea formerly acted as a sieve, now the meshes 
let through every species of voyager.” Before the War, steamship 
companies had thousands of agents eager to stimulate immigration 
from the various European countries to the United States. “Run¬ 
ners” went from village to village in Southern Europe attempting 
to induce the natives to emigrate; they were paid commissions by 
the steamship companies. Boarding-house keepers, liquor dealers, 
and others whose business brought them in contact with many 
people were utilized as subagents. Steamship lines encouraged 
the peasants of Europe to purchase tickets to the United States. 
Many American employers of labor are also very anxious to increase 
the volume of immigration. Professor Commons has well said: 
“The desire to get cheap labor, to take the passenger fares, and to 
sell land have probably brought more immigrants than the hard 
conditions of Europe, Asia, and Africa have sent.” The demand 
for cheap labor and for profits brought to our shores the Negro 
slave and the indentured white servant; and it greatly stimulated 
the immigration of unskilled labor during and immediately follow¬ 
ing the Civil War. It is an ever-present and potent force; but the 
old method of kidnaping people and shipping them to Colonial 
America is now replaced by more genteel and less direct methods. 

The presence of friends and relatives in this country has been 


IMMIGRATION AND POPULATION PROBLEMS 423 

another cause of immigration. It was estimated that in the years 
immediately preceding 1914, about one-third of the total number 
of immigrants were assisted by friends. Of course, this factor is 
peculiarly effective in times of prosperity. On the other hand, 
during an era of depression intending immigrants will be dis¬ 
couraged by their oversea friends. Before the passage of the 
acts of 1875, 1882, and 1891, foreign governments, and particularly 
local authorities, were often guilty of dumping members of the 
delinquent, dependent, and defective classes upon our shores. 


CHANGES IN THE NATIONALITY OF IMMIGRANTS 

Before 1880 immigration to the United States was confined chiefly 
to the countries of North-Western Europe. Great Britain, Ireland, 
and Germany furnished a large percentage of the total influx. 
Southern and South-Eastern Europe sent few immigrants previous 
to the opening of the decade of the eighties. The people coming 
before 1880 were not dissimilar to the early American colonists. 
The early immigrants were accustomed to a representative type 
of government; they were skilled artisans or progressive farmers 
of the thrifty, self-reliant type. By 1890 a shift in the sources 
of immigration was becoming apparent. People were coming in 
large numbers from Southern and Eastern Europe. The typical 
immigrant of the period 1890-1914 was not accustomed to a repre¬ 
sentative form of government. He was an unskilled worker, he 
was not self-reliant, and he was not a man of initiative. 

During the decade 1851-1860, Germany, Great Britain, and 
Ireland furnished 88 per cent of the total immigration, while 
Austria-Hungary, Italy, Russia, and Poland sent only four-tenths 
of one per cent. During the decade 1881-1890, the percentages 
were 55.6 and 17.6, respectively. Then the balance turned. Free 
land was disappearing; and our famous westward-moving frontier 
line had vanished. The days of the pioneer and the backwoods 
farmer had become historic rather than actual. Centralized and 
subdivided industry — railway, mine, and factory — were calling 
for the unskilled and docile peasant worker of Southern Europe. 
During the decade 1891-1900 the three countries of Northern 
Europe only sent 31.6 per cent of the total, while Austria-Hungary, 
Italy, Russia, and Poland furnished slightly more than one-half 


424 


LABOR PROBLEMS 


of the entire stream. Of the one and one-quarter millions of 
immigrants coming to our shores in 1907, approximately three- 
fourths came from Southern and Eastern Europe. 

The warp and woof of American civilization was inevitably modi¬ 
fied by such a striking change in the character of the immigration 
coming to this country. It caused far-reaching modifications in 
our industrial, political, and social fabric. On the other hand, 
the changing nature of the stream of immigration was in no small 
measure the result of important industrial transformations which 
have taken place since the outbreak of the Civil War. Our complex, 
subdivided, and routinized industrial mechanism provided posi¬ 
tions for the man without initiative, for the “ beaten man from 
beaten races.” The small shop and the farm of the anti-trust days 
could not utilize men who work only according to orders given by 
the foreman or the overseer. Modern economic progress made a 
place for the man from South-Eastern Europe; on the other hand, 
his presence and the ease with which immigration was stimulated 
hastened the development of complex large-scale industry with its 
minute subdivision of labor. The presence in America of large 
numbers of men and women from Southern Europe was both a 
cause and an effect of far-reaching industrial and social changes. 


EARLY OPPOSITION TO IMMIGRATION 

Although legislation restricting immigration is of a recent date, 
opposition to immigration is by no means of recent origin. It has 
not developed solely because of the recent influx of the men from 
Southern Europe and Asia. The debates in the Constitutional 
Convention of 1787 disclose some fear of the political influence of 
the foreign settler. The Constitution specifies that no person may 
be a member of the House of Representatives who has not been a 
•citizen of the United States for seven years; or a senator without a 
citizenship extending over a period of nine years. Still more 
clearly is the distrust of the foreigner expressed in the clause which 
debars foreign-born citizens from the office of President. Washing¬ 
ton did not favor immigration; and Jefferson wished to stop all 
immigration. During the administration of John Adams a law 
was passed requiring a residence of fourteen years before natural¬ 
ization. This severe requirement was removed under the following 


IMMIGRATION AND POPULATION PROBLEMS 425 


administration. The Alien and Sedition laws, also passed under 
Adams’ administration, bear further testimony to the hatred of 
the Federalists for the alien. Gouverneur Morris did not believe 
that a man could become firmly attached to an adopted country. 
The following quotations from newspapers indicate in the flowery 
language of the period the opposition to the “old” immigration 
during the administrations of John Adams and Thomas Jefferson. 
The Columbian Centinel of March 2, 1799, denounced “the incon¬ 
siderate, short-sighted policy of indiscriminately inviting foreigners 
among us.” It also asserted that “honest men and good citizens 
are as rare among them as worshippers of the true God in Sodom 
and Gomorrah.” The Massachusetts Spy , dated March 10,1802, de¬ 
clared that “ Exotics from the hotbeds of foreign countries have been 
so fostered in this country as to overtop its native plants, which 
languished under their rank and pestiferous shade. . . . Foreign 
vices are imported to your once virtuous shores.” 1 The Hartford 
Convention in 1814 desired to make every person thereafter natural¬ 
ized ineligible to hold any civil office under the federal government. 
The Convention held that the population of the United States 
was then “amply sufficient to render this nation in due time 
sufficiently great and powerful.” This early feeling of opposition 
to the influx of foreign elements appears to have been due to an 
anticipation of political dangers. It was felt that the newly or¬ 
ganized republican institutions might be undermined and destroyed 
by the votes and influence of people from monarchical Europe. 

With the increase of immigration which came in the thirties, 
nativistic sentiment grew rapidly. Ireland and Germany con¬ 
tributed a large percentage of the immigration of the thirties. In 
1836 the number of immigrants from Ireland was 30,578 and from 
Germany, 20,707; these two countries sent 51,285 out of a total 
of 76,242 immigrants. Racial and religious differences generated 
antagonism between the newcomers and those already here. It 
was also asserted that England was “shoveling” her paupers upon 
American cities. In 1832 Seth Luther, a labor agitator, declared 
that American manufacturers were sending agents to Europe in 
order to induce working people to come to this country so as to 
increase the competition for jobs and thus lower the scale of wages. 
The forties and early fifties brought large numbers of Roman 
1 Quoted in The New Republic , Dec. 19, 1923. 


426 


LABOR PROBLEMS 


Catholic Irish and German liberals to our shore. Violent attacks 
upon Catholics and Catholic churches occurred. “ Native Ameri¬ 
can” Congressmen were elected. A national convention of Native 
Americans was held. Delegates from nine states were present. 
After 1848 many of the Germans who came to this country did not 
immediately seek naturalization. This fanned the flames. A period 
of rabid Americanism followed; and “manifest destiny” became 
a fetish. The superiority of the American and of American insti¬ 
tutions was universally believed. 

Daniel Webster’s defiant note to Austria is symptomatic of the 
hysterical and self-satisfied feeling of the nation. “The power of 
this republic at the present moment is spread over a region one 
of the richest and most fertile on the globe, and of an extent in 
comparison with which the possessions of the House of Hapsburg 
are but a patch on the earth’s surface.” “Democratic individual¬ 
ism” was in the saddle. Emerson and Thoreau were the philo¬ 
sophical mouthpieces of the era. In 1852 the Know-Nothing or 
American party came into prominence. This spectacular organiza¬ 
tion began its rocket-like career as a secret society. The purpose 
of the Know-Nothing party seems to have been the exclusion of 
foreigners and Roman Catholics from all national, state, and local 
offices, and the extension of the period of residence before natu¬ 
ralization. It was urged that immigration was increasing po¬ 
litical corruption, and that the immigrants were lowering the 
moral standards of the American people. Southern members of 
the Know-Nothing party declared that immigration was enabling 
the North to gain upon the South in influence in the halls of 
Congress. The slavery question was not unrelated to the rise of 
Know-Nothingism in the South. Political and religious factors 
were ever placed in the foreground during the Native American 
agitation. But it is probable that lurking in the background may 
be found the fear of the foreigner as an industrial competitor. 
Mr. Hall remarks: “It is probable that the Know-Nothing move¬ 
ment was not purely the result of solicitude for the moral welfare 
of the country or the apprehension for permanence of religious 
liberty.” 1 As the slavery agitation grew more and more furious 
and the movement toward disunion became strong, the Know- 
Nothing party disintegrated and_disappeared. 

1 Hall, P. F., Immigration, p. 209. 


IMMIGRATION AND POPULATION PROBLEMS 427 

With the opening of the Civil War the pendulum of public opinion 
suddenly swung to the opposite extreme. The army was diverting 
men from productive industry; and labor-saving devices were 
multiplied. Women, apprentices, unskilled workers, Negroes, and 
immigrants were demanded in industry. By 1864 less than a 
decade after Know-Nothingism was at its height, immigrants were 
welcomed by all classes except the wage earners. In that year 
Congress passed an act to encourage immigration. This act was 
passed as a war measure and was not utilized after the close of 
the war. Immigration was stimulated during the war period by 
the high nominal wages, by a depression in certain European 
countries, and by the artificial encouragement of immigration by 
American interests and by the American government. The double 
need of workers and soldiers caused the hatred of immigrants to 
be transmuted into desire for their presence. “Few instances of 
such a rapid and complete transformation in public sentiment 
can be cited in the whole history of the country.” 1 The labor 
interests naturally opposed the stimulation of immigration, because 
it would tend to keep down wages and to reduce the standard 
of living. But the voice of the imperfectly organized workers was 
drowned by the insistent demand of other classes in the alleged 
interest of the general welfare and of industrial progress. Industrial 
necessity brushed aside racial and religious antagonism. 


IMMIGRATION PROBLEMS 

Between 1880 and 1914, the immigrant performed a large fraction 
of the rough, hard, and routine work which was done in this country. 
The immigrant, with his low standards of living, threatened those 
of the native wage workers; but he also helped to make oppor¬ 
tunities for many native Americans in skilled, administrative, and 
“white-collar” jobs. The influx of large numbers of immigrants 
gave an impetus to the expansion of industry and to the multi¬ 
plication of industrial and professional opportunities. Immigra¬ 
tion tended for a period of years to increase the minuteness of the 
subdivision of labor. Finally, however, subdivision of labor and 
the increase in routine performance made feasible the invention 
and utilization of the automatic machine of the self-feeding variety. 

1 Fite, E. D., Social and Industrial Conditions during the Civil War, p. 195. 


428 


LABOR PROBLEMS 


The Iron Man began to displace the flesh-and-blood man in the 
routine tasks of industry. When that period opened, the insistent 
call for the immigrant worker was stilled in this country. 

Immigration caused by the demand for cheap labor, and leading 
to a conglomeration of races and nationalities, and to a gradual, 
stiffening stratification of classes, has been an important factor in 
complicating politics in a nominally democratic country. Political 
corruption is not solely the product of the influx of immigrants 
unaccustomed to democracy or liberalism; but the successive waves 
of immigration have prepared a fertile soil for the cultivation of 
corrupt practices which eat out the vitals of democracy and 
promise to leave it a hollow mockery which conceals a powerful 
plutocracy. Corruption in politics is primarily due to the inter¬ 
ference of private economic interests with public business; but 
wide differentiation of interests and races increases the opportunities 
for such interferences. The political machine, directed by the boss, 
maintains and strengthens its power and influence by carefully 
and skillfully balancing nationalities and interests against each 
other. The colorless man possessing a flexible backbone and no 
important and well-defined opinions of his own comes to the front; 
and the colorless man is the visible tool of the boss. The latter 
in turn is controlled by men desiring special privileges and favorable 
legislation. 

Immigration has complicated our economic, social, and political 
problems by introducing into the midst of the nation a conglomera¬ 
tion of races and of nationalities. It has been the fashion when 
confronted by the evils of crime, by radical movements, or by 
political corruption, to make a scapegoat of the foreigner in our 
midst. Americans have insisted that Americanization or the assim¬ 
ilation of the immigrant should be our goal. After the melting 
pot had done its work we were inclined confidently to insist that 
our difficult political and social problems would be easy of solution. 
On the other hand, certain nations desire that their emigrants 
continue to look to the mother country for guidance, and in case 
of war or international stress, support the homeland rather than 
their adopted country. Under these circumstances, immigrants 
are difficult of assimilation. They are subjected to cross-currents 
of influence. 

During the World War, Americans saw that our surface man- 


IMMIGRATION AND POPULATION PROBLEMS 429 

nerisms such as slang and fashions in dress were accepted by im¬ 
migrants with celerity, but in the “things of the spirit,” in the 
intangible, the new and the old stock manifested vital differences. 
So many hyphenated Americans or “bigamists in citizenship” 
were found that the older stock became alarmed. It was felt that 
the loyalty of certain groups of comparatively recent immigrants 
would be determined by our international policy. In short, Ameri¬ 
cans came to feel that assimilation or Americanization was a longer 
and more difficult process than we had assumed in the years im¬ 
mediately preceding the World War. 

Doubtless much of the literature upon racial superiority and 
inferiority is not scientific. There are no adequate reasons for 
insisting that certain races are inherently superior or inferior to 
others. An isolated or pure race is not likely to go forward in the 
scale of civilization; it stagnates. It has been asserted by capable 
students that the meeting places of cultures and civilizations 
furnish the ferment out of which come new civilizations and new 
cultures. Nevertheless, social difficulties arise from the close con¬ 
tact of two very dissimilar races. Although social prejudice may 
be illogical, it is a state of mind which should not be disregarded. 
The mixture of different races in the same territory is charged with 
social dynamite. 


LEGISLATION 

The first general immigration law was not passed until 1882. 
Previous to the Civil War several acts were passed for the purpose 
of insuring to immigrants decent treatment and safety while cross¬ 
ing the ocean. Acts were passed in 1862, 1869, 1873, and 1875, 
dealing with coolie immigration from the Orient. With one ex¬ 
ception, until 1882, the federal government left the control of 
immigration almost entirely in the hands of the seaboard states. 
This exception was the temporary act of 1864 passed as a war 
measure to encourage immigration. The general law of 1882 
marks the first step toward definite federal control over immigra¬ 
tion. This act provided for a head-tax of fifty cents and excluded 
certain undesirable classes of immigrants. The law, however, 
provided for cooperation between state and federal authorities. 
Other general acts were passed in 1891, 1893, 1903, 1907, and 1917. 
The office of Superintendent of Immigration, now denoted Com- 


430 


LABOR PROBLEMS 


missioner-General of Immigration, was created under the Act of 
1891. Under pressure from the Knights of Labor and other labor 
organizations, Congress passed contract labor laws in 1885 and 
1888. These acts aimed to prevent the importation of unskilled 
labor under contract to work for American firms. They have been 
strengthened by later legislation. The admission or rejection of 
the alien who knocks at our gate for admission is a function of the 
federal government; but after he has been admitted, the respon¬ 
sibility for fair treatment, for his welfare, and for his betterment 
depends chiefly upon the state governments. The fashioning of the 
immigrants and their children into good American citizens and 
efficient workers is a task for the state and the local communities 
to shoulder. The real immigration problem has been state rather 
than federal. 

The aim of immigration legislation preceding the first quota law 
passed in 1921 was the exclusion of all aliens who are mentally, 
morally, or physically deficient. Under the present law, illiterates, 
convicts, persons possessing physical and mental deformities, or 
afflicted with contagious diseases, beggars, vagrants, stowaways, 
persons suffering from chronic alcoholism, paupers, or those likely 
to become public charges, anarchists, and contract laborers are 
the chief excluded classes. Provision is made for careful inspection 
of immigrants and for detention of those suspected of belonging to 
one of the excluded classes. The Act of 1917, which provided for 
the literacy test, also, by means of a “geographical delimitation,” 
practically excluded all orientals except Japanese; and the latter 
were kept out under the terms of a “gentleman’s agreement” 
formulated in 1907 between the American and Japanese govern¬ 
ments. Provision was made for the inspection of immigrants and 
for the detention and return of those belonging to one of the ex¬ 
cluded classes. Up to 1921, our immigration laws, with the exception 
of those restricting the influx of orientals and possibly of the lit¬ 
eracy test law of 1917, were based on the principle of selection 
rather than of restriction. 

The opening of the World War greatly reduced the stream of 
immigration; but after the War was ended, it was clear that many 
Europeans were planning to migrate to the United States. The 
first restrictive or quota measure became a law in May, 1921. 
It was hastily passed as an emergency measure. Originally its fife 


IMMIGRATION AND POPULATION PROBLEMS 431 


was to extend only over one year, but it remained on the statute 
books until July 1, 1924. This act and the subsequent quota legis¬ 
lation were superimposed upon the then-existing selective legisla¬ 
tion. The Act of 1921 provided that the number of alien immigrants 
of any nationality entering the United States in any one year be 
restricted to 3 per cent of the number of foreign-born persons of 
such nationality resident in the country according to the Census of 
1910. Of the Western Hemisphere, only certain non-independent 
countries of Central and South America were included in the quota 
provisions. Native-born citizens of Canada and other countries 
of North and South America were not subject to the quota restric¬ 
tions. 

In 1924 the second quota act was passed. The percentage was 
lowered to 2; and the Census of 1890 was taken as the standard 
for the application of the quota provisions. The use of the earlier 
census reduced the relative number of immigrants who might be 
admitted from Southern and Eastern Europe. It was assumed 
that persons coming from that section of Europe were not readily 
assimilated. This act also provided that “no alien ineligible to 
citizenship shall be admitted to the United States”; and our 
naturalization laws apply only to persons of the white race or of 
African descent. The Act of 1924 therefore definitely excluded 
the Japanese as well as many other Asiatics. The number of immi¬ 
grants eligible to admission annually under the quota provisions was 
slightly more than 160,000. This act provided that after three 
years “the annual quota of any nationality for the fiscal year be¬ 
ginning July 1, 1927, and for each fiscal year thereafter shall be 
a number which bears the same ratio to 150,000 as the number of 
inhabitants in continental states in 1920 having that national 
origin” bears to the total population in 1920. The minimum quota 
is 100. The “national origins” provision of the Act of 1924 did 
not go into effect until 1928. The Western Hemisphere is again 
excluded from the restrictions of this statute. The Act of 1924 as 
modified in 1928 is now (1932) on the statute books. 

WHY WERE RESTRICTIVE LAWS PASSED? 

Although opposition to immigration is not a matter of recent 
decades only, it was not until 1921 that the advocates of restriction 


432 


LABOR PROBLEMS 


became sufficiently numerous and politically powerful to put re¬ 
strictive legislation of a sweeping character upon the federal statute 
books. Our traditional policy had been based upon the assumption 
that this country was and should be an asylum for the oppressed 
and disinherited of other less attractive and desirable portions of the 
globe. Our experience during the World War to which the atten¬ 
tion has been directed in a preceding paragraph led many to fear 
the effects of unrestricted immigration upon our national life and 
unity. We wer-e in danger of becoming a “polyglot boarding 
house,” and the confidence that good governmental conditions 
would transform undesirable human material into good citizens 
had been weakened. In the decade following the close of the 
World War, more emphasis was placed upon the potency of heredity 
than in preceding years. Our attitude toward immigration was also 
modified by the passing of the frontier and the realization a gen¬ 
eration later that the American continent no longer contained vast 
areas of undeveloped resources. The recognition of the desirability 
of conserving natural resources led quite naturally to the demand 
for the restriction of immigration. Finally, the progress of inven¬ 
tion led to the machine which did not need unskilled machine 
feeders, and which reduced the demand for backbreaking work. 
Technological unemployment, not scarcity of workers, became a 
topic of investigation and discussion. 


WHAT WERE THE CONSEQUENCES OF A POLICY 
OF RESTRICTION? 

Although the first quota law was passed in 1921, the reduction 
of the stream of immigration began seven years earlier with the 
opening in 1914 of the World War. What were the chief conse¬ 
quences of the reduction of immigration in the period, 1914-1929? 
The marked movement of the Negro from the plantations of the 
South to the industrial cities of the North and a considerable influx 
of workers from Mexico and Canada, countries not under the quota 
restrictions, were caused in a large measure by the reduction in 
the immigration of Europeans. The movement from the farms 
to the cities was accelerated for the same reason. After the quota 
laws were passed, many aliens were smuggled into the country. 
The Canadian and the Mexican borders are long and not easy to 


IMMIGRATION AND POPULATION PROBLEMS 433 

guard. Aliens were smuggled over the line by auto, by wagon, 
by boat, by airplane. Others doubtless walked across the border. 
In 1923 it was conservatively estimated that one hundred persons 
daily entered the United States illegally. The exclusion of the 
Japanese people under the second quota act was bitterly resented 
by that nation. 

RESTRICTION OF IMMIGRATION AND 
INTERNATIONAL PROBLEMS 

Countries having a dense population, low standards of living, 
and a high birthrate as a rule desire to find an outlet for a portion 
of the population. Laws restricting the free movement of people 
toward a country of less dense population, in which the normal 
standards of living are high and birthrates lower, are resented by 
the country of emigration. Countries of immigration consider 
laws restricting immigration to be purely domestic matters; coun¬ 
tries of emigration are prone to insist that important international 
problems are raised when barriers are erected against an influx 
of immigrants. Is it ethically just for a land-grabbing people 
to erect barriers against the inhabitants of an over-crowded area? 
May a people maintaining a high birthrate justly insist that other 
nationalities move more closely together in order to make room 
for the surplus population of a densely populated area? The 
answer which the American people are making is that the hope 
of maintaining high standards of living here and elsewhere may 
conceivably depend upon the erection of barriers to the free move¬ 
ment of populations across international borders. Nations having 
fairly high standards of living and without great density of popula¬ 
tion cannot be expected to become asylums for the surplus popula¬ 
tions of densely populated countries burdened with a high birth¬ 
rate. 

POPULATION TRENDS 

The population of the United States has increased rapidly; not 
until the decade ending in 1920 did the percentage of increase 
during a census period of ten years fall below twenty. The fol¬ 
lowing table presents the statistics in regard to the rate of popula¬ 
tion increase. If the Census of 1920 had been taken in April 


434 


LABOR PROBLEMS 


instead of January, the last two figures would be approximately 
15.4 and 15.7, respectively. 


Decade 

Percentage of Increase 

1790-1800 

35 -i 

1800-1810 

36.4 

1810-1820 

33 -i 

1820-1830 

33-5 

1830-1840 

32.7 

1840-1850 

35-9 

1850-1860 

35-6 

1860-1870 

22.6 

1870-1880 

3 0 - 1 

1880-1890 

25-5 

1890-1900 

20.7 

1900-1910 

21.0 

1910-1920 

14.9 

1920-1930 

16.1 


Since the birthrate is declining and immigration is small or nega¬ 
tive, a further decline in the rate of population growth may be 
forecast for the present decade. 

The reduction in the birthrate, the decrease in immigration, 
and improvements in medical science not only affect the rate of 
population increase but these changes also modify the relative 
numbers in different age groups of the population. The table 
below presents the percentages in different age groups for three 
census periods, and also an estimate by an authority in population 
problems, of the percentages in 1950. 1 


Age Period 

1950 

Year and Per Cent 

1930 1900 

1880 

0-4 

7.6 

9-3 

12.1 

13.8 

0-19 

30.6 

38.8 

44-3 

48.1 

20-44 

40.8 

38.3 

37-7 

35-8 

45-64 

20.8 

17.4 

I 3-7 

12.6 

65 and over 

7.8 

5-4 

4.0 

3-4 


While the population of the United States increased over 17 mil¬ 
lions from 1920 to 1930, the number of children under five years 

1 Thompson, W. S., The Annalist , Jan. 15, 1932. 


IMMIGRATION AND POPULATION PROBLEMS 435 

of age decreased 128,840. The percentage of the population under 
twenty years of age has decreased in the fifty-year period, 1880 
to 1930, from 48.1 to 38.8, while the percentage of those over 
twenty years of age has increased from 51.9 to 61.2. Age is gaining 
upon youth in relative numerical importance in the ranks of the 
American people. 

Because of these extraordinary increases in the population, 
American industry has been speeded up to meet the demands of 
an ever-rapid expansion of the population. The slowing down of 
the growth of population will cause many adjustment pains. Busi¬ 
ness will also face a new situation in regard to demand for the 
products of industry because of an increasing relative number of 
older people in the population, and, possibly, because of increasing 
decentralization of population. If the population expands slowly, 
a higher average standard of living may be predicted than in case 
of a rapidly expanding population. If this view is correct, relatively 
more of comforts and luxuries will be demanded in the near future 
than would be the case if the population continued to increase at 
the old rate of from 20 to 30 per cent each decade. Moreover, 
there is a greater probability of changes in the demand for comforts 
and luxuries than for basic necessities. The slowing down of popu¬ 
lation growth may add elements of uncertainty to many industrial 
enterprises. The cost of obsolescence in industry as a whole may 
increase. Industries having high fixed expenses and much highly 
specialized machinery will be difficult to direct in a financially 
successful manner. Over-expanded industries producing neces¬ 
sities or producing articles especially demanded by children or 
young folks may face a serious outlook in the immediate future. 

The decrease in the relative number of the young in our total 
population will cause marked changes in demand schedules. Less 
relatively of children’s clothes and toys will be required. The 
high-powered and sport-model automobile will be in smaller de¬ 
mand. The middle-aged and the old will demand more radios, 
good housing, and books than the young. Gadgets and gewgaws 
may experience a decreased demand and the more conservative 
and less sensational types of goods may more readily find a market. 
A larger percentage of the population will be of working age as 
the rate of population growth is retarded. The problem of finding 
jobs for older workers and of re-training them for new jobs will 


436 


LABOR PROBLEMS 


become of greater moment — or a considerable extension of the 
old age pension system may be anticipated. 

In 1932 the attitude of the American people toward immigration 
restriction was such that it seemed safe to insist that immigration 
would not again become an important factor in population growth 
or composition. Since the immigration of the period preceding 
restriction went largely to the cities, restriction of immigration 
will be one factor in slowing up the growth of cities. Other factors 
in the industrial field are operating in the same direction. It is 
no longer necessary for people to live near their workplaces. 
The radio, the telephone, and the automobile have nearly elim¬ 
inated rural and small-town isolation. Manufacturing establish¬ 
ments located in small towns can today get such power as they may 
need from an electric wire. Power can usually be obtained as 
cheaply as in large cities, and taxes in rural and suburban com¬ 
munities are as a rule less than in the large cities. With a general 
recognition of the undesirability of much hiring and firing, the 
need of a reservoir of out-of-job workers to draw upon is reduced; 
and this reservoir of available workers has been alleged to be an 
excellent reason for locating a manufactory in or near a large city. 
The trends in population growth — the slowing down of population 
growth, the increasing percentage of the upper-age groups in our 
population, and the probability of increasing decentralization of 
population — briefly considered above are of much importance in 
business and in industrial relations. The alert business leader is 
studying the probable influence of such trends upon the industry 
in which he is interested. 


REFERENCES 

Boucke, O. F., Principles of Economics, Vol. 2, Chaps. 18, 19, and 20 

Carlton, F. T., Economics, Chap. 26 

Dublin, L. I., Population Problems 

Garis, R. L., Immigration Restriction 

Jerome, H., Migration and Business Cycles 

Ross, E. A., Standing Room Only 

Thompson, W. S., Population Problems 

-, “Population Trends in the United States and their Effect on 

Industry,” The Annalist , Jan. 15, 1932 
Watkins, G. S., Labor Problems, Chap. 16 


CHAPTER XXV 


NEW ASPECTS OF EDUCATION 

EDUCATION AND INDUSTRIAL EVOLUTION 

Education is a labor-saving device; its function is to pass on to 
a new generation the fundamentals of the experience and accumu¬ 
lated information of those who have preceded. If each generation 
were obliged to begin at the bottom and recapitulate the growth 
and experience of all the preceding hosts of men and women, 
progress would necessarily be almost impossible. 

Changes in the educational program and the methods utilized 
in the educational process are closely related to the evolution of 
industry and the changes in the ways of securing a living ora living 
plus comforts. 1 In a pioneer society, the duties of educational 
institutions were few; in a complex industrial society with crowded 
population centers, practicing division of labor and specialization 
of industry, educational functions become varied and important. 

In an epoch in which change takes place slowly, in which a 
person is born and dies in almost the same environment, in which 
few technological inventions occur in the span of a generation or 
more, education may profitably emphasize specific information 
and training. Vocational methods undergo little alteration within 
a period of years; the obsolescence rate is low. In a dynamic 
epoch — and the Western World is now in the most dynamic period 
of all history — education confronts a very different task. To pass 
to an oncoming generation a mass of specific information and of 
vocational blueprints is not measuring up to the demands of the 
time. The student of today will become active in a few years in a 
world greatly changed. Methods and processes in the professional 
and business world are in constant flux. In recent years many 
trades and vocations have been rendered obsolete because of tech¬ 
nological advance. If education is to light the path over which the 
1 Carlton, F. T., Education and Industrial Evolution. 

437 


LABOR PROBLEMS 


438 

car of progress is to pass, it must provide nourishment which is 
adapted to the educational requirements of all classes of individ¬ 
uals . 1 Education in a dynamic world must perforce stress funda¬ 
mental principles, broad training, ability to reason from cause to 
effect, and the power of initiative which enables one successfully 
to cope with a new and unexpected situation. Education should 
point out clearly the underlying forces which are operating in a 
rapidly changing world. The truly educated man is adaptable; 
he is able to change his point of view so as to get a proper focus 
upon a new world in the process of evolution. Schools should 
foster, not destroy, intellectual curiosity. It has been suggested 
that education should help to make opportunities, rather than to 
accept the view, of doubtful validity, that opportunities always 
exist. 

As has been indicated elsewhere, one important consequence of 
the rise of large-scale industry, the use of power, and the spread of 
specialization has been the loss of the traditional educational func¬ 
tions of the home and the workshop, and the relative and absolute 
increase in the duties and responsibilities of formal educational 
institutions in vocational as well as in avocational training. The 
increased use of machinery and power in recent decades has been 
a factor in decreasing the working day and week, and gives promise 
of additional increases in leisure time for workers of all types. 
Educational institutions are, as a consequence, faced with the duty 
of providing education for leisure as well as for the working period. 
The development of night and late afternoon work in institutions 
such as Cleveland College is a direct result of technological progress. 
Adult education is here to stay. The big problem is the determina¬ 
tion of the methods and content of an educational program which 
is intended for those already a part of the active working force of 
the community. 

The trained man of the near future should be a coordinator and 
a “generalist” rather than a narrowly trained specialist. The 
“jack-of-all-trades” may again be given a higher rank in the eyes 
of the employer and the community than he was allowed in the 
pre-depression days when mass production was placed on a pedestal. 
In a recent discussion of the vocational requirements of an engineer, 
it was asserted that outstanding civil engineers have had a “broad 
1 Carlton, F. T., Education and Industrial Evolution. 


NEW ASPECTS OF EDUCATION 


439 


cultural education ” as well as technical training. The engineer 
needs a mastery of English and “ the ability to discuss non-engineer¬ 
ing subjects intelligently with all types of men with whom he comes 
in contact in his profession.” 1 The trained man in almost any 
field of endeavor should acquire the habit also of constantly exam¬ 
ining his business for new opportunities and for obsolete practices 
and ideas. 


EDUCATIONAL IDEALS 

The chief standards for the measurement of educational values 
are four in number — practical, cultural, psychological, and social. 
The practical standard is important because of the demand for 
trained and efficient workers in business and professional life. 
Commercial, trade, industrial, agricultural, and professional train¬ 
ing are grouped under the head of practical education. Today 
the emphasis is placed upon trade and commercial education; 
but professional training for the law, theology, medicine, and 
pedagogy was in former generations the most important of the 
practical work of the educational system. 

The prestige which still surrounds the cultural or the classical 
form of education is purely traditional, and is based in a large 
measure upon class prejudice. The purely cultural form of modern 
education was formerly the practical; it was once a part of the 
necessary training of the professional man. By a curious, but not 
unusual, process of slow evolution it is now esteemed because it 
bestows upon its possessors ideals and mannerisms which are dis¬ 
tinctly opposite to those of present-day practical education. 
Modern cultural or classical training is an outgrown, out-of-date 
form of practical education. The effect of such training, unless 
coupled with instruction in the social sciences, is to carry old 
ideals, habits of thought, and class demarcations down into modern 
industrial society. It leads to conservatism and tends to focus the 
mind upon problems which do not directly and vitally touch 
modern and complex society. Classical education directs the at¬ 
tention toward the distant, the uncommon, the immaterial, and the 
conventional. The cultural ideal glorifies the safe and sane, and 
art for art’s sake; but it carefully and conscientiously avoids 

1 The American Observer , May 25, 1932. 


440 


LABOR PROBLEMS 


contact with the radical or the insurgent. The old shaded paths 
of quietude and isolation are sought. The scholar in search of the 
cultural goal will not linger in “the house by the side of the road 
where the race of men pass by.” The cultural ideal of education 
is chiefly valued because it is to be attained only by the chosen 
and sheltered few. Its charm, like that of the diamond, is in no 
small measure due to scarcity and exclusiveness. 1 

Modern psychological study and investigation show that a certain 
variety and sequence of training are necessary in order that each 
individual may develop his maximum mental and manual ability. 
The psychological demand is for a well-rounded development of 
each individual. The social criterion for educational efficiency is 
based upon the democratic demand for good citizenship. It places 
a high valuation upon that which tends to break down class 
demarcation, to reduce artificial inequality, and to uplift the human 
race as a whole. Scientific students of child and adult life are 
attempting to evaluate the curriculum and pedagogical methods 
from the psychological point of view. 

Until recently, business interests have emphasized the importance 
of the practical standard. Management has been prone to insist 
that students in our public schools and technical institutions 
be trained to fit into some definite place in the business world. 
But along with personnel administration and shop committees has 
come a new concept of the ideal worker. The forward-looking 
business man is discarding the idea that, except for a few skilled 
men, the worker should be a plodding, unthinking, and narrowly- 
trained piece of human machinery. The so-called educational and 
social reformers and the leaders and thinkers among organized 
labor are urging the importance of the psychological and social 
demands. These interests stand firmly for the view that the school 
system of today is for the training of thinking, as well as of working, 
men and women. Organized labor has demanded that the voca¬ 
tional training of the schools “make the apprentice or graduate 
a skilled craftsman in all branches of his trade.” The unionist ob¬ 
jects to “conditions which educate the student or apprentice to 
non-union sympathy and prepare him as a skilled worker for scab 
labor and strike-breaking purposes, thus using the children of 
workers against the interests of their organized fathers and broth- 
1 Carlton, F. T., The Industrial Situation, pp. 67-68. 


NEW ASPECTS OF EDUCATION 


44i 


ers in the various crafts.” The social point of view emphasizes 
training for leisure, enjoyment, and citizenship as well as for the 
active duties of earning a living. 

THE TRAINING OF APPRENTICES 

Originally apprenticeship rules applied alike to the trades and 
to the so-called learned professions. Although concealed under 
new names, these have been adhered to quite rigidly down to the 
present time in the professions. With some exceptions, the di¬ 
vision seems to have been made according to the character of the 
product. If the product of the trade or profession is material, 
apprenticeship rules have gradually been changed, and, in a large 
measure, have become obsolete. If the product of the trade or 
profession is immaterial, the rules have been successfully upheld 
by the gild of the profession and legalized by appropriate legisla¬ 
tion. The old apprenticeship system reaches back to the time of 
Queen Elizabeth. During her reign it was enacted that no person 
should exercise any trade or “mystery” without serving an appren¬ 
ticeship of seven years. The apprentice was indentured to a 
master for that period. The apprentice lived in the home of the 
master as a member of his family. The master became the guardian 
of the boy. He was responsible for the physical well-being and the 
intellectual, moral, and manual training of the apprentice. 

As long as the handicraft system prevailed, the old apprentice¬ 
ship program served its purpose fairly well, although doubtless 
many boys were not properly taught and were exploited in the 
interests of their masters. With the Industrial Revolution and the 
introduction of machinery came the decadence of the system of 
apprenticeship. By 1864 the old system was practically only a 
matter of history. In the decade of the sixties the attitude of the 
wage earners has been summarized somewhat as follows: (1) The 
period of apprenticeship should be fixed at not less than five years. 
(2) The number of apprentices in a trade should be limited. “The 
unanimous feeling among mechanics was that the cause of low 
wages, lack of work, and powerlessness of workers to withstand 
oppression by employers was due to an excessive number of workers 
in the various skilled trades, and that the outlook for the future 
was getting increasingly darker because of the continual pouring 


442 


LABOR PROBLEMS 


in of more boys.” (3) The apprentices should be more thoroughly 
trained. The complaint was made that the employer was teaching 
the apprentice only a fraction of his trade. (4) A legal system of 
indenture somewhat modified from that of the old and outgrown 
system was advocated. 1 The modern system of training appren¬ 
tices is the fruitage of the period since the close of the Civil War era. 

Two very important reasons may be given for the evolution of a 
new system of training apprentices, (a) The introduction of ma¬ 
chinery and the subdivision of labor have made the training of 
apprentices a burden. ( b ) The introduction of accurate quantita¬ 
tive and qualitative methods of measurement into all industrial 
processes, and the use of the blueprint and of interchangeable 
parts, have made a knowledge of the rudimentary principles of 
mathematics, physics, and mechanics essential to the training of 
a skilled workman. The new system of training apprentices co¬ 
ordinates shop and school training. The old apprenticeship system 
is dead; but a new form is being evolved. The training of the 
apprentice is now an integral part of the broader problem of voca¬ 
tional education. 

Although the methods employed in training apprentices vary 
considerably in different shops, at least two general types may be 
discerned. In the first type, the shop and the school are both 
carried on directly under the control of the employing company. 
In the second, a certain amount of school training is required or 
expected of apprentices outside working hours; but they attend 
public schools or private schools not under the immediate super¬ 
vision of the officials of the employing company. The Wisconsin 
and the Oregon apprenticeship laws are examples of recent con¬ 
structive legislation in regard to the training of apprentices. Three 
parties are recognized in the agreement — the employer, the young 
employee, and the state. In Oregon, a State Apprenticeship Com¬ 
mission is given authority to supervise the indenture of apprentices. 
“It shall be the duty of all school officials to cooperate with the 
State apprenticeship commission, the State board for vocational 
education, and employers of apprentices in providing the necessary 
training classes for apprentices.” As a part of his obligation, an 
apprentice is required to attend training classes for not less than 

1 Wright, C. D., Bulletin of United States Bureau of Education , Whole No. 389, 

p. 16. 


NEW ASPECTS OF EDUCATION 


443 


four hours per week. 1 The Wisconsin law authorizes the State 
Industrial Commission to supervise the indenturing, training, and 
schooling of apprentices in that state. 

In certain trades or occupations in which the safety, health, and 
general welfare of the workers or of the general public are quite 
directly dependent upon the efficiency and skill of the operators, 
the government, acting under the police power of the state, has 
passed laws regulating and restricting employment, and requiring 
that these trades or professions shall not be practiced except by 
properly qualified persons. The federal government and a con¬ 
siderable number of states have enacted laws requiring the examina¬ 
tion and licensing of persons practicing various trades. Among the 
occupations are those of barbers, horseshoers, plumbers, stationary 
firemen and engineers, steam and street railway employees, and 
certain classes of mine workers. These requirements, which pos¬ 
sibly grow out of the decay of the apprenticeship system, increase 
the demand for school training. In some respects this tendency 
appears to be a recrudescence of the old method of granting a 
monopoly to those who have attained a certain proficiency. If the 
state establishes minimum requirements for entrance into certain 
trades, it is certainly the duty of the public school authorities to 
offer adequate opportunities for obtaining the legally requisite 
knowledge and training. 


REFERENCES 

Carlton, F. T., Education and Industrial Evolution 

-, The Industrial Situation, Chap. 4 

Commons, J. R., Industrial Goodwill, Chap. 13 
Hodgen, M. T., Workers’ Education in England and the United States 
Hoopingarner, D. L., Labor Relations in Industry, Chap. 12 
Watkins, G. S., Labor Management, Chap. 19 

1 Monthly Labor Review, May, 1931, PP- 80-81. 


CHAPTER XXVI 


TODAY AND TOMORROW 

THE AFTERMATH OF THE “NEW ERA” 

In the final chapter, it is our task to recall some of the points 
discussed in the preceding chapters, and to attempt an interpreta¬ 
tion of present tendencies in the industrial and political world. 
The nation and the world sorely need, in this period of rapid change, 
interpreters of present-day trends. Interpreters are needed whose 
vision is not distorted by prejudice, traditional imperatives, or 
group or local interests. To perform the task of interpreting today 
is not easy; but to forecast the future is much more difficult. 

The decade from 1919 to 1929 was an era of extraordinary 
progress in productivity. The natural optimism of the American 
people was made more prominent by the remarkable strides in 
invention and in productivity. Americans complacently concluded 
that the genius of the hustling business man and the high-pressure 
salesman would keep the business machine going steadily onward 
and upward. The “new era” was conceived of as a plateau which 
would continue to slope upward as the years passed. Gorges and 
Grand Canons ahead were not anticipated. Speculation became 
the order of the day. Men and women “made money” by selling 
securities to other men and women who in turn expected to do 
likewise. Feverish activity and unbridled "optimism led toward 
the inevitable slump and crisis. The fever of 1924-1929 was the 
direct cause of the chill of 1929-1932. After the great debacle of 
1929-1932 occurred, it became crystal clear that the much-glorified 
“new era” was merely an old one in disguise. The operation of 
each business firm from a purely individualistic point of view led 
to maladjustments, to over-expansion and over-production in many 
industries, and to a breakdown of the machinery of production. 
In the interdependent industrial economy of today, efficiency in 
individual plants is not a guarantee of great and well-distributed 
total output. The statistics of business activity in 1928 compared 

444 


TODAY AND TOMORROW 445 

with those of 1932 indicate that industry and finance are today 
delicate mechanisms which are easily thrown out of “high.” 

There is no dearth of the great majority of staples. Indeed, over¬ 
production of staples — articles for which the demand in technical 
language is said to be inelastic — is the fear of today. Poverty in 
the face of plenty is the paradoxical situation into which competi¬ 
tion and capitalism have led the peoples of the Western World. 
Wheat, coffee, sugar, coal, automobiles, rubber, shoes, are among 
the articles which we are geared to produce in excess of probable 
demand. And this over-expansion has led to unemployment and 
further decrease in effective demand — that is, demand backed by 
purchasing power. The increase in the equipment used to produce 
essential commodities and the improvement in the methods em¬ 
ployed in their production actually tends to decrease the demand 
for these articles. In the words of another, “we cannot use up the 
many useful and necessary things we have and would be in worse 
trouble had we more of them.” It is, indeed, a “vicious circle.” 
The nation is physically able to produce a sufficiency for a high 
standard of living for every man, woman, and child included in its 
population; but we were actually moving in 1932 toward lower 
standards of living. From the point of view of the nation as a 
unit, a serious depression is a financial disease. Men, machinery, 
and materials are in as great abundance as in an era of expansion and 
optimism. The productive and marketing machinery has become 
maladjusted and semi-paralyzed. 

If, in the Western World, the scientists, engineers, and personnel 
managers have solved the problem of sufficient production to lift 
the population out of poverty, our task is now one of regularizing 
industrial activity, and of balancing production and consumption 
at as high a level as invention, management, and material resources 
will permit. The nation possesses enormous potential productive 
resources. How may the benefits of science and management be 
made accessible to the masses? How can personal initiative be 
combined with public and social responsibility? How may abun¬ 
dance be secured for all, all the time? “The management of 
plenty” or “the management of civilization” is now a major com¬ 
munity task. Walter Lippmann suggests that “ the solution of that 
problem depends upon changes in human motives as great as those 
which distinguish a feudal peasant from the business man.” Chang- 


446 


LABOR PROBLEMS 


ing civilizations and new ways of getting a living change human mo¬ 
tives although the “biology” of man may not undergo significant 
modifications. A complex and interdependent civilization is easily 
thrown into confusion or out of adjustment. It can hope to survive 
if, as the years pass, the emphasis upon “social objectives” is 
increased, and the honor and prestige accorded to those who work 
solely for “number one” and for speculative and unearned gains, 
is reduced; otherwise there is little hope or occasion for the survival 
of such a civilization. 

In the United States, as has been pointed out, industrial progress 
has been extraordinarily rapid and far-reaching; but the American 
people are not far from the pioneer or frontier stage of development. 
They are clinging tenaciously to the individualism fostered by 
pioneer life and small-scale industry. In a world of bewildering 
technological changes, the effect of social inertia is not difficult of 
discernment. Many individuals are, indeed, proud of their preju¬ 
dices. Men and women dislike to make mistakes in etiquette; 
but they too frequently insist on retaining old and worn-out mental 
furniture. To use a pronunciation which marks one as old-fashioned 
or provincial is something to be avoided; but to maintain a firm 
grasp upon an old prejudice, or an assumption of the “good old 
days,” in an age of scientific attainment does not put one outside 
the pale of good society — it may be a card of admission. The 
stress and strain of adjustment to a new era is much more severe in 
the United States than it is in the older countries of Europe where 
cooperation is not unusual and where industrial progress has moved 
at a slower pace. While industry is demanding coordination, trade 
agreements, and a new type of leadership, tradition, custom, and 
inherited national ideals raise high the standard of the competitive 
struggle and of individual initiative. 

THE TRADITIONAL AND THE ACTUAL 

The contrast between the historical and traditional United States 
and the actual situation which the American people now confront, 
is notable. Unless we are to drift toward disorder and dictatorship, 
Americans must cease to think in terms of the ox-cart and the old- 
oaken-bucket era, and begin calmly to analyze the present in the 
light of today’s industry and inter-relationships. Stagnation or 


TODAY AND TOMORROW 


447 


ultra-conservatism, the insistence that today’s social and political 
programs be analyzed in the light of yesterday’s philosophy, will 
lead sooner or later to revolution. The United States has been: — 

A country of undeveloped resources 
A debtor nation 

A country of rapidly expanding population 
A country of rural dwellers 
In need of more necessities and comforts 
A nation dominated by competitive activity 
A people interested in speculative affairs 

Our business philosophy and methods have evolved in the atmos¬ 
phere of the frontier. Rugged individualism has been worshiped. 
Americans have assumed that adjustments to change will be made 
automatically and without great difficulty or suffering. 

In the fourth decade of the twentieth century, the United States 
is: — 

A country of well-developed resources 
A creditor nation 

A nation of slowly expanding population 

A country whose population is predominantly urban and suburban 
A community faced with the necessity of studying the economics of 
abundance or glut and of adjustment to rapidly changing economic 
and industrial conditions 

A country of relatively large-scale industry in which less and less 
emphasis is being placed upon competition and more and more upon 
the desirability of coordination and of regulation 
Characterized by excess of equipment in many lines of business — 
the result of over-expansion due to competitive struggles 
Faced with the desirability of reducing speculation to a minimum 

In the industrial America of today, there are many socially-desirable 
steps which individual employers may take; but some policies 
cannot be successfully carried out by each separate organization. 
In such cases, either group — association — action or govern¬ 
mental action is necessary. The United States of 1932 is no more 
the United States of Jefferson or of Jackson than is our electrical 
engineering that of the famous kite-flyer, Benjamin Franklin. 
Washington and Jefferson could not be expected to anticipate the 
need for cooperative action through governmental agencies which 


448 


LABOR PROBLEMS 


the modern city and the modern transportation and communica¬ 
tion system have made imperative. To walk into the future with 
our eyes focused upon the glorious pioneer and individualistic past 
is to blunder and to fail. 

AFTER THE DEPRESSION 

A serious depression has usually been followed by a period of 
relative radicalism or more accurately of restlessness and discontent, 
by vociferous demands for the betterment of the condition of the 
rank and file, for an improvement in the efficiency of governmental 
units, and for a reduction of governmental expenditures. However, 
history shows that the radical or progressive movement does not 
as a rule gain much impetus until several years have elapsed subse¬ 
quent to the acute phases of the depression. The crisis of 1837 
was followed in the forties and early fifties by a humanitarian or 
“ hot-air ” period. A medley of voices was heard demanding sundry 
reforms. A galaxy of movements ranging from transcendentalism 
to Mormonism and to settlements organized by utopian Socialists, 
and from abolitionism to food-fad-ism and to mesmerism, attracted 
the attention of the discontented of that period. The panic of 
1873 was followed by labor difficulties beginning about 1877. By 
the middle of the decade of the eighties, over ten years after the 
crisis, social unrest reached a maximum. Numerous fantastic 
reform movements drew the attention of farmers and wage workers. 
A “counter-reformation” was also started by the conservatives 
of the period. The attention of students in American colleges and 
universities was turned toward economic and labor problems. 
Dr. R. T. Ely’s pioneer book on American labor problems was 
published in 1886; and the American Economic Association was 
organized in 1885. Again, the panic of 1893 was followed in 1896 
by the election of the conservative Republican candidate, William 
McKinley. The practice of muckraking and trust-busting did 
not make much headway until a decade had elapsed after the 
collapse in the business and financial world. 

If things run true to form, the depression beginning in 1929 will 
be followed within a few years from the date of this writing (1932) 
by vigorous demands for a reformation of capitalism. Movements 
looking toward radical changes will probably be numerous. To¬ 
day, many are pessimistically or hopefully, as the case may be, 


TODAY AND TOMORROW 


449 


looking for a breakdown in the present order; but capitalism with 
its emphasis upon individualism has proved pliable and adaptable. 
With monotonous repetition, the radicalism of yesterday has be¬ 
come the accepted policy of today. Capitalism is more likely to 
change in form rather than to suffer immediate dissolution. In 
the judgment of the writer, among the items which may be reason¬ 
ably anticipated are: an improvement in business ethics, the men 
at the head of large industries will pay more attention to the 
welfare and interests of consumers and employees than in the 
past, banks will get out of speculative activities and will be di¬ 
vested of investment affiliates, the juggling of securities by so- 
called wizards of finance will cease or be greatly curtailed, less 
emphasis will be placed upon mere bigness of a business enterprise 
and more upon efficient and regular operation, there will be more 
general adoption of plans for affording security of the jobs and 
incomes of wage earners, and, perhaps, the attention of economists 
and business leaders may be focused upon plans for preventing 
the extreme swings of the business cycle. 

The serious depression of 1929-1932 caused a vast amount of 
fear and discontent among the employed as well as among the 
unemployed. Every employee feared that his job would soon dis¬ 
appear or that some other worker would displace him. Many 
employing firms followed a policy of maintaining wage rates, 
staggering jobs, and giving direct aid to their workers; on the 
other hand, other hard-boiled employers used the depression, with 
its vast reserves of unemployed, as a convenient excuse for cutting 
wages, speeding-up workers, eliminating bonus plans and personnel 
departments. By the end of the summer of 1932, the policies of 
the hard-boiled employers were followed by a large number of 
harassed firms whose business was “in the red” or near to that 
unfortunate status. Before the end of that summer, unrest was 
manifested in such spectacular events as the picketing of the 
capital by an army of ex-soldiers seeking immediate payment of 
“the bonus,” as sundry other marches upon local governmental 
centers, and as strikes in various parts of the country. The tone 
of labor papers indicated an increase in irritation and bitterness 
among the mass of organized labor. In the summer and early 
autumn, it seemed probable that the nation was soon to face an 
extraordinary outcropping of discontent and radicalism among the 


450 


LABOR PROBLEMS 


industrial workers, the farmers, and many of the so-called white- 
collar group. This should not be interpreted to indicate that the 
United States is in danger of a revolution which will overturn the 
present political and economic order. Students of revolutionary 
disturbances are of the opinion that revolutions are generated 
slowly; at least three generations are required after a given political 
and economic order begins to function badly. 1 Mental attitudes 
change slowly. 

A depression brings in its wake demands for aid from federal and 
state governments. Individuals and organizations which in a time 
of prosperity emphasize the virtues of self-reliance and individual 
initiative turn in the time of stress and strain to the powers that 
are in control of the government for aid. Farmers, bankers, the 
railways, real estate operators, and war veterans clamored for and 
received aid in one form or another from the federal government in 
the depression of 1929-1932. In 1932 few indeed were the voices 
raised in favor of a laissez faire policy on the part of the federal 
government. The Reconstruction Finance Corporation is a long 
step toward putting the government in business. It is a form of 
state Socialism which in 1927-1929 would have been bitterly op¬ 
posed by those who were later instrumental in bringing it into 
existence. How much vitality this movement to accept the guid¬ 
ance of the federal government will retain in the days which im¬ 
mediately follow the upturn of the business cycle is, of course, 
problematical; but organized labor and other groups of wage 
workers are not likely to forget that the most conservative of men, 
in an emergency, turn away from rugged individualism and laissez 
faire. 

As in periods following other depressions, we shall probably 
witness the rise of a considerable group advocating a return to the 
“ simple life,” seeking a way toward a simpler and more secure 
mode of living. The simple life movement will look toward a 
revival of pioneer resourcefulness and economic independence. It 
will make an attempt to establish a new frontier. The agitations 
for communistic settlements and for free and inalienable home¬ 
steads on the part of the land reformers of the forties and early 
fifties of last century are illustrations of this type of demand. 
During the depression of 1929-1932 many of the unemployed made 
1 Edwards, L. P., Natural History of Revolution. 


TODAY AND TOMORROW 


45i 


their way to the rural districts and established their families “upon 
the land.” Numerous insurgents will be led again to proclaim the 
advantages of “three acres and a cow” or of a small farm bearing 
diversified crops for use rather than for sale. The security of the 
simple life will be stressed and contrasted with the insecurity of 
income, investments, and jobs in the complex, interdependent 
industrial and urban life of mass-production-mad America. 

The paramount issue before the American people is: How 
may security accompanied by greater leisure and more respect be 
obtained for the rank and file of the wage workers of the nation? 
And the only satisfactory answer is found in results or in deeds. 
It will not be found in appeals or in pious platitudes. As Glenn 
Frank has aptly remarked, “men cannot eat words. Men cannot 
wear words. Men cannot trust their old age to words.” We are 
greatly in need of the type of leadership which does not depend 
upon slogans, catch-words, and emotionalism. The post-depression 
era will be a time of testing. 

REFERENCES 

Carlton, F. T., Economics, Chap. 34 

--, Organized Labor in American History, Chap. 2 

Donham, W. B., Business Adrift 

Frank, G., “Notes on the Renewal of America,” Annals of the American 

Academy of Political and Social Science, July, 1932 
Milbank, A. G., “Socialized Capitalism,” The Survey, July 1, 1932 
































































V 




















































INDEX 


Absentee leadership, 98 
Amalgamated Clothing Workers, 
89, 228, 239 

American Federation of Labor, 93, 
102, 104, 105, 107, 109, no, 
116 

American Iron and Steel Associa¬ 
tion, 66 

American Management Associa¬ 
tion, 308 

American Rolling Mill plan, 247 
Americans losing resourcefulness, 

19 

Anarchy in business, 8 
Apprentices, English system of, 
441; limitation of, 157; training 
of, 441 

Arbitration, compulsory, appraised, 
218 

Arbitration in the United States, 
212, 213, 214, 222 
Arthur, P. M., 97 
Attitudes, changing, 448 

Baltimore and Ohio shop plan, 114, 
235, 2 4i 

Benefit features of unions, 159,160, 
161 

Bethlehem Steel Company, 192 
Birthrate, falling, n 
Bishop, J. L., 45 
Blacklist, 185 

Bonus, length of service, 266 
Boycott, 173, 179 
Bucks Stove and Range Company 
case, 180 

Building Trades Council, 87 


Business, a profession, 20; aims 
of, 307, 308 
Business unions, 90 

Canadian National Railway, 114 
Cannibalism precedes slavery, 30 
Capital accumulation and saving, 
16 

Carelessness in work, 298 
Carpenters and Joiners, United 
Brotherhood of, 89, 136 
Census Report, 1930; unemploy¬ 
ment, 315 

Changes, social and political, 3, 4 
Chase, Stuart, 18 
Child labor, extent of, 340 
Child labor and the factory system, 
338 

Child labor legislation, 340, 341, 
342 , 344 

Child labor problem, 335 
Cigar makers, organization of, 
1843, 66 

Cities, industrial, 45 
City, strategic importance of, 7, 
35i 

Clayton Act of 1914, 185 
Closed shop, 143 
Collective bargaining, 141, 194 
Colonial, farm policies, 40; wage 
earner, 38, 42; indentured serv¬ 
ant, 42; slaves, 42 
Columbia Conserve Company 
plan, 254 

Common law and employer, 386 
Commons, John R., 42, 43, 47, 48, 
52, 145, 361 


453 


454 


INDEX 


Communication, easy and rapid, 
n 

Communist or Workers’ Party of 
America, 126 

Community, living conditions in, 
304; social attitude of, 8, 9 
Company union vs. organized 
labor, 245 

Competition and rivalry, interest 
factors in, 307 

Complexity and world unity, 6 
Conciliation service, federal, 215 
Conditions, working and living, 
205 

Conditions of growth in unionism, 
US 

Consolidation movement, 19; and 
the future of labor, 112 
Constitution of the U. S. and labor 
laws, 353 

Consumers’ cooperation, 108 
Consumption, heart of the unem¬ 
ployment problem, 312 
Control in industry, 232 
Convict labor, 69 
Cooperative enterprises, building 
and loan, 415; consumers’, 408, 
409; credit, 414; distributors’, 
414; producers’, 411; store, 
408; types, 407 

Corporation stock, ownership of 
by workers, 20, 113 
Courts, attitude of toward strikes 
and boycotts, 174 
Craftsman’s pride, 304 
Craftsmanship, decline of old, 14; 
new, 15 

Creative impulse vs. routine and 
monotony, 297 

Danbury Hatters case, 179 
Debs case, 181 


Democracy and the worker, 23 
Dennison, Henry S., 285, 299 
Depression paralyzes industry, 13, 
hi, 448 

Design, a new element in industry, 
189 

Dewey, Professor John, 277 
Displacement of hand workers, 16 
Donham, Dean H. B., 21 
Douglas, Professor Paul H., 314 
Dutchess Bleachery Company, 254 

Economies of abundance, 446 
Education, and the new leisure, 19; 
for apprentices, 441; new as¬ 
pects of, 437, 438; old and new 
ideals in, 439; for trained man¬ 
power, 440; world changes and, 
438 

Eight-hour day, 68, 70 
Einstein, Dr. Albert, 13 
Ely, Richard T., 69 
Employee representation, 112, 244, 
251, 252 

Employers’ associations, 51, 129 
Employers’ liability, 386 
Employment, irregularity of, 314 
Employment agencies, 326, 327 
Employment functions, 282 
Engineer vs. speculator in industry, 
2 4 

Engineering, human, 5, 277 
Ethics, business, 449 
Ethics of little industry, 9 
“Exit” interviews, 284 
Experts in technology and eco¬ 
nomics, 22 

Factories in the U. S., 44, 45 
Factory system, 43, 337 
Fairchild, H. P., 18 
Female labor report of 1836, 347 


INDEX 


455 


Feudal system, 35 
Filene Cooperative Association, 
246 

Food and purchasing power, 12 
Forces, social, 5 
Forecasts and foresight, 21 
Foreman, n, 12, 300, 301, 440 
Foundries, cooperative, 70 
Frank, President Glenn , 8, 451 
Franklin , 13 

Frey, John P., 33, 199, 319 

Gantt, Henry L., 265 
Gompers, Samuel, 93, 94, 97, 98 
Goodwill, 304 

Goodyear Industrial Representa¬ 
tion Plan, 252 
Greeley, Horace, 62 
Green, William, 97 
Group bonus, 265 
Group interests in business, 309 
Groups in industry, 309 

Hamilton, Alexander, 336 
Hamlin, S., 319 

Handicraft stage of industry, 43 
Hart Schaffner & Marx plan, 
240 

Hat Finishers, National Associa¬ 
tion of, 67 
Hayes, G ., 319 
Health insurance, 394 
Hillman, Sidney, 97 
Hiring the worker, 281 
Hobo and tramp, 119 
Homestead Act, 61 
Hopf, Harry A., 305 
Hours of labor, 154, 342 
Housing conditions, 69 
Hoxie, Professor R. F., 90, 208 
Human engineering, 5, 277, 305, 
306 


Human equation, 306 
Human society, 4 
Humanitarian and labor move¬ 
ments, 57 

Immigration, 418, 419, 420, 423, 
424, 427, 430, 431, 432, 433, 434 
Imprisonment for debt, 58, 59 
Incentives, negative, 291; positive, 
292; in production, 27, 113, 298 
Individualism, 24, 446 
Industrial manager, new type of, 
230 

Industrial psychology, 278 
Industrial relations, commission 
on, 326 

Industrial revolution, 4 
Industrial Workers of the World 
(I.W.W.), 89, 121 
Injunctions and labor union, 5, 
183; and public opinion, 184 
Insecurity and fear, 300 
Instincts, 294, 295, 297 
Interdependence, group and indi¬ 
vidual, 11 

Interests, common, 208, 242, 309 
International Harvester Company 
plan, 253 

International Typographical Union 
and the linotype, 139 
Interviewing employees, 255 
Inventiveness and adaptability, 
22 

Investor’s rights, 230, 309 
Iron industry, 65 

Jacks, L. P., 18 

Job, analysis, 283; monotony, 10, 
11, 291, 299; security, 11, 299, 
300; worker’s vested interest in 
the, 228 

Jurisdictional disputes, 136 


45 6 


INDEX 


Kansas Industrial Relations Court, 
217 

Knights of Labor, Noble Order of, 

75, 76, 77 

Knights of St. Crispin, 73 

Labor, U. S. Department of, 215 
Labor legislation, 353, 354, 357, 
359, 364, 367, 368, 378 
Labor organizations, 79, 80, 81, 82, 
83, 88, 135 

Labor problems, 8, 74, 93, 94, 99, 
157, 283, 286, 346 
Labor-saving devices, 66 
Laissez faire philosophy, 356 
Large-scale business units, 11 
Laziness, 294 

Leadership in industry, 4, 97, 287, 
288 

League for Industrial Rights, 131 
Leiserson, W. M., 149 
Leisure for all, 11, 16 
Lescohier, D. D., 329 
Liberty, 357 

Linotype and labor policy, the, 140 
Lockouts, 169, 175; and strikes, 
162 

Losely, H. P., 322 

Machine age, 15, 16, 351 
Machinery, introduction of, 138 
Manufacturers’ Protective and De¬ 
velopment Association, 131, 237, 
299 

Markets, labor, 7 
Martineau, Harriet , 347 
Mathew son, S. B., 149 
McMaster, J. B., 42 
Mechanical arts outrun social 
sciences, 21 

Mechanics lien law, 59 
Mechanization, 297 


Mediation, federal board of, 215; 

in the U. S., 212, 213 
Medieval period, 34 
Mergers, 19 

Middle class and syndicalism, 124, 

125 

Midvale Steel Company, 192 
Migratory worker, 119, 313 
Mine Workers of America, United, 
89 

Mitten plan, 247 
Mobility of labor, 151, 285 
Morale and leadership, 288 
Morgan, Arthur E., 149 
Musicians, American Federation 
of, 87 

National Association of Manu¬ 
facturers, 131, 132 
National Civic Federation, 133 
National Industrial Conference 
Board, 133 

National Labor Congress of 1866, 

6 

National Labor Union platforms, 
68, 69 

National Metal Trades Associa¬ 
tion, 131 

Naumkeag Steam Cotton Com¬ 
pany, 241 

Negro workers, neglect of, 116, 127 

Ohio Industrial Commission, 220 
Old age pensions, 396 
Output, restriction of, 148, 150 

Parker, Professor C. H., 294 
Party, first workingmen’s, 49 
Patten, Dr. Simon N., 13, 29 
Peace, industrial, 222 
Peel, Sir Robert , 341 


INDEX 


Personnel department, 280, 282, 
284, 298, 309 
Picketing, 170 
Pioneers, 6, 8 

Planning vs. planlessness, 7, 13 
Plant capacity, excess, 8 
Political action policies, 100 
Political aspects of the labor move¬ 
ment, 69 

Population, 11, 12, 418, 434 
Potters’ Association, U. S., 130 
Powderly, T. V., 75 
Predatory unionism, 91 
Premium or bonus wage plans, 264 
Printing industry and unions, 140 
Product sharing, 272 
Productive energy, human, 190 
Productivity per capita, n 
Profit sharing, 270, 271, 272, 273 
Promotion policies, 285 
Propaganda, n 
Property rights, 29 
Psychology, social, 298, 311 
Public, functions of business, 9; 
interest and labor disputes, 209, 
212; opinion and industrial war¬ 
fare, 10 

Public utilities and society, 212 
Public works program, planned, 
330 

Publicity and prestige, 302 
Punctuality bonus, 266 
Purpose in industry, 306 

Quality bonus, 266 

Radical groups and migrants, 119 
Railway Labor Board, 214 
Railway Shopmen’s Strike, 1922, 
182 

Rationalization, 203 
Regularization, 331, 332, 333 


457 

Republican party platform, i860, 
62 

Research, industrial and commer¬ 
cial, 11; and labor, 114 
Restriction of output, 147 
Revolutionary unionism, 91 
Robins, Mrs. Raymond , 359 
Rockefeller plan, 253 
Roman gilds, 33, 34 
Roosevelt, President Theodore , 26 
Ross, Professor Edward A., 300,361 
Routine work, 291, 295 

Sabotage, 171, 305 
School system, free, 60 
Scientific management, 189, 190, 
191, 192, 193, 194, 195, 197 
Seager, Henry R., 362 
Shop committee, 245, 248 
Slavery, 3, 30, 39 
Slichter, S. H., 303, 320 
Social inertia, 7, 116; mechanics, 
11 

Socialist Labor Party, 127 
Specialization, 11 
Speeding-up, 153 

Stabilization of employment, 312 
Stamp, Sir Josiah, 22 
Standard of living, 70 
Statesmanship, industrial, 8 
Statistics of employment, 315; of 
strikes and lockouts, 164 
Steward, Ira, 71 
Stock purchase plans, 252 
Stone, Warren S., 97 
Stove Founders’ National Defense 
Association, 131, 237, 238 
Strikes, 108, 162, 166, 170, 172, 
176, 224 

Subdivision of labor, 357 
Sweated industries, 212 
Syndicalism, 121, 124 


458 


INDEX 


Taylor, F. W., igi 
Taylor Society, industrial employ¬ 
ment code of, 308 
Tead, Ordway, 287, 309 
Teamwork in industry, 114, 298 
Technological achievements and 
lawlessness, 19; unemployment, 
318 

Temperamental workers, 313 
Tempo of life, 21 

Textile Workers of America, 
United, 114, 241 
Time wage, 262 
Towne, Henry R., 193 
Trade, agreements, 213, 234; 

monopoly, medieval, 36 
Traditions, 447 

Typographical Union, Interna¬ 
tional, 87 

Unemployables, 313 
Unemployment, 69, 160, 298, 312, 
314, 315, 317, 322 
Union label, 186 

Union leadership, militant, 98, 113 
Unionism, industrial, 89, 116, 117; 

origin of trade, 47 
Unions, tests of strength of, 94, 95 
United Brotherhood of Carpenters 
and Joiners, 136 


United Mine Workers of America, 
89 

Uplift unionism, 91 

Violence in strikes, 166 

Wage, 113, 202, 257, 261, 263, 264, 
267, 268, 293 

Wages and scientific management, 
197, 201 

Walker, F. A., 340 
War, Civil, 64, 65, 336; Labor 
Board, National, 247 
Waste in Industry, Report on, 315 
Welfare work, 275 
Wells, H. G., 229 
Westward movement, 62, 65 
White House Conference on Child 
Health, 351 
Wolman, Leo, 118 
Women workers, 28, 335, 339, 346, 
349 

Work and leisure, 18 
Workers, and social psychology, 
the, 298; instruction of the, 299; 
International Industrial Union, 
122; Party, 101 

Workingmen’s compensation acts, 

389 

Works’ councils, 244, 251 



















































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